I-Hydroxy3-methylglutaryl coenzyme A reductase (HMG CoA reductase) is a single polypeptide chain with two contiguous domains: a soluble domain (548 amino acids) that catalyzes the rate-controlling step in cholesterol synthesis and a membrane-bound domain (339 amino acids) that anchors the protein to the endoplasmic reticulum (ER). HMG CoA reductase is degraded at least lo-fold more rapidly than other ER proteins; degradation is accelerated in the presence of cholesterol. To understand this controlled degradation, we transfected reductase-deficient Chinese hamster ovary (CHO) cells with a plasmid expression vector containing a reductase cDNA that lacks the segment encoding the membrane domain. The plasmid produced a truncated reductase (37 kd smaller than normal) that was enzymatically active with normal kinetics; most of the truncated enzyme was found in the cytosol. The truncated enzyme was degraded one-fifth as fast as the holoenzyme; degradation was no longer accelerated by sterols. We conclude that the membrane-bound domain of reductase plays a crucial role in the rapid and regulated degradation of this ER protein.