Oxidized phospholipids, including oxidation products of palmitoyl-arachidonyl-phosphatidyl choline (PAPC), are mediators of inflammation in endothelial cells (ECs) and known to induce several chemokines, including interleukin-8 (IL-8). In this study, we show that oxidized PAPC (OxPAPC), which accumulates in atherosclerotic lesions, paradoxically depletes endothelial cholesterol, causing caveolin-1 internalization from the plasma membrane to the endoplasmic reticulum and Golgi, and activates sterol regulatory element-binding protein (SREBP). Cholesterol loading reversed these effects. SREBP activation resulted in increased transcription of the low-density lipoprotein receptor, a target gene of SREBP. We also provide evidence that cholesterol depletion and SREBP activation are signals for OxPAPC induction of IL-8. Cholesterol depletion by methyl-β-cyclodextrin induced IL-8 synthesis in a dose-dependent manner. Furthermore, cholesterol loading of ECs by either the cholesterol–cyclodextrin complex or caveolin-1 overexpression inhibited OxPAPC induction of IL-8. These observations suggest that changes in cholesterol level can modulate IL-8 synthesis in ECs. The OxPAPC induction of IL-8 was mediated through the increased binding of SREBP to the IL-8 promoter region, as revealed by mobility shift assays. Overexpression of either dominant-negative SREBP cleavage-activating protein or 25-hydroxycholesterol significantly suppressed the effect of OxPAPC on IL-8 transcription. A role for SREBP activation in atherosclerosis is suggested by the observation that EC nuclei showed strong SREBP staining in human atherosclerotic lesions. The current studies suggest a novel role for endothelial cholesterol depletion and subsequent SREBP activation in inflammatory processes in which phospholipid oxidation products accumulate.