We produced transgenic mice that express a dominant-positive truncated form of sterol regulatory element-binding protein-2 (SREBP-2) in liver and adipose tissue. The encoded protein lacks the membrane-binding and COOH-terminal regulatory domains, and it is therefore not susceptible to negative regulation by cholesterol. Livers from the transgenic mice showed increases in mRNAs encoding multiple enzymes of cholesterol biosynthesis, the LDL receptor, and fatty acid biosynthesis. The elevations in mRNA for 3-hydroxy-3-methylglutaryl coenzyme A (HMG CoA) synthase and HMG CoA reductase were especially marked (13-fold and 75-fold, respectively). As a result, the transgenic livers showed a 28-fold increase in the rate of cholesterol synthesis and a lesser fourfold increase in fatty acid synthesis, as measured by intraperitoneal injection of [3H]water. These results contrast with previously reported effects of dominant-positive SREBP-1a, which activated fatty acid synthesis more than cholesterol synthesis. In adipose tissue of the SREBP-2 transgenics, the mRNAs for cholesterol biosynthetic enzymes were elevated, but the mRNAs for fatty acid biosynthetic enzymes were not. We conclude that SREBP-2 is a relatively selective activator of cholesterol synthesis, as opposed to fatty acid synthesis, in liver and adipose tissue of mice.