Hepatic steatosis is common in patients having severe hyperhomocysteinemia due to deficiency for cystathionine β-synthase. However, the mechanism by which homocysteine promotes the development and progression of hepatic steatosis is unknown. We report here that homocysteine-induced endoplasmic reticulum (ER) stress activates both the unfolded protein response and the sterol regulatory element–binding proteins (SREBPs) in cultured human hepatocytes as well as vascular endothelial and aortic smooth muscle cells. Activation of the SREBPs is associated with increased expression of genes responsible for cholesterol/triglyceride biosynthesis and uptake and with intracellular accumulation of cholesterol. Homocysteine-induced gene expression was inhibited by overexpression of the ER chaperone, GRP78/BiP, thus demonstrating a direct role of ER stress in the activation of cholesterol/triglyceride biosynthesis. Consistent with these in vitro findings, cholesterol and triglycerides were significantly elevated in the livers, but not plasmas, of mice having diet-induced hyperhomocysteinemia. This effect was not due to impaired hepatic export of lipids because secretion of VLDL-triglyceride was increased in hyperhomocysteinemic mice. These findings suggest a mechanism by which homocysteine-induced ER stress causes dysregulation of the endogenous sterol response pathway, leading to increased hepatic biosynthesis and uptake of cholesterol and triglycerides. Furthermore, this mechanism likely explains the development and progression of hepatic steatosis and possibly atherosclerotic lesions observed in hyperhomocysteinemia.