In mammalian cells, sterol regulatory element-binding proteins (SREBPs) coordinate metabolic flux through the cholesterol and fatty acid biosynthetic pathways in response to intracellular cholesterol levels. We describe experiments that evaluate the functional equivalence of mammalian SREBPs and the insect homologue of SREBP-1a, HLH106, in both mammalian and insect cell culture systems. HLH106 binds to both palindromic E-boxes and direct repeat sterol regulatory elements (SREs) efficiently, suggesting that it has a dual DNA binding specificity similar to the mammalian proteins. The amino-terminal "mature" protein activates transcription from mammalian SREs in both mammalian and Drosophila tissue culture cells. Additionally, HLH106 also requires a ubiquitous regulatory co-activator to efficiently activate transcription from mammalian SREs. These properties are shared with its mammalian counterparts. When expressed in mammalian cells, the carboxyl-terminal portion also localizes to perinuclear membranes similar to mammalian SREBPs. Furthermore, membrane-bound HLH106 is proteolytically processed in response to intracellular sterol levels in mammalian cells in an SREBP cleavage-activating protein-stimulated fashion. The presence of an SREBP homologue in Drosophila whose processing is regulated by intracellular sterol levels when expressed in mammalian cells suggests that related processing machinery exists in insect cells. This is notable, since insects are reportedly incapable of de novo sterol biosynthesis.