Mammalian cells control their membrane composition by regulating the vesicular transport of membrane-bound sterol regulatory element binding proteins (SREBPs) from endoplasmic reticulum (ER) to Golgi. Transport is blocked by cholesterol, which triggers SCAP, the SREBP escort protein, to bind to Insigs, which are ER retention proteins. The cholesterol trigger mechanism is unknown. Using recombinant SCAP purified in detergent, we show that cholesterol acts by binding with high affinity and specificity to the 767 amino acid octahelical membrane region of SCAP. This octahelical region contains a conserved pentahelical sterol-sensing domain found in six other polytopic membrane proteins. We show that the membrane domain of SCAP is a tetramer and that cholesterol binding is inhibited by cationic amphiphiles, raising the possibility of allosteric regulation by positively charged phospholipids. The current studies show that cells control their cholesterol content through receptor-ligand interactions and not through changes in the physical properties of the membrane.