To identify genes that are transcriptionally activated by sterol regulatory element-binding proteins (SREBPs), we utilized mRNA differential display and mutant cells that express either high or low levels of transcriptionally active SREBP. This approach identified stearoyl-CoA desaturase 2 (SCD2) as a new SREBP-regulated gene. Cells were transiently transfected with reporter genes under the control of different fragments of the mouse SCD2 promoter. Constructs containing >199 base pairs of the SCD2 proximal promoter were activated following incubation of cells in sterol-depleted medium or as a result of co-expression of SREBP-1a, SREBP-2, or rat adipocyte determination and differentiation factor 1 (ADD1). Electromobility shift assays and DNase I footprint analysis demonstrated that recombinant SREBP-1a bound to a novel cis element (5'-AGCAGATTGTG-3') in the proximal promoter of the SCD2 gene. The finding that the endogenous SCD2 mRNA levels were induced when wild-type Chinese hamster ovary fibroblasts were incubated in sterol-deficient medium is consistent with a role for SREBP in regulating transcription of the gene. These studies identify SCD2 as a new member of the family of genes that are transcriptionally regulated in response to changing levels of nuclear SREBP/ADD1. In addition, the sterol regulatory element in the SCD2 promoter is distinct from all previously characterized motifs that confer SREBP- and ADD1-dependent transcriptional activation.