The current paper describes a line of cultured rat hepatoma cells (McA-RH7777 cells) that mimics the behavior of rat liver by producing an excess of mRNA for sterol regulatory element-binding protein 1c (SREBP-1c) as opposed to SREBP-1a. These two transcripts are derived from a single gene by use of alternative promoters that are separated by many kilobases in the genome. The high level of SREBP-1c mRNA is abolished when cholesterol synthesis is blocked by compactin, an inhibitor of 3-hydroxy-3-methylglutaryl CoA (HMG CoA) reductase that inhibits cholesterol synthesis. Levels of SREBP-1c mRNA are restored by mevalonate, the product of the HMG CoA reductase reaction, and by ligands for the nuclear hormone receptor LXR, including 22(R)-hydroxycholesterol and T0901317. These data suggest that transcription of the SREBP-1c gene in hepatocytes requires tonic activation of LXR by an oxysterol intermediate in the cholesterol biosynthetic pathway. Reduction of this intermediate lowers SREBP-1c levels, and this in turn is predicted to lower the rates of fatty acid biosynthesis in liver.