Regulated intramembrane proteolysis (RIP) of endoplasmic reticulum (ER) membrane-anchored transcription factors is known to maintain sterol homeostasis and to mediate the unfolded protein response (UPR). Here, we identified CREBH as a RIP-regulated liver-specific transcription factor that is cleaved upon ER stress and required to activate expression of acute phase response (APR) genes. Proinflammatory cytokines increase expression of ER membrane-anchored CREBH. In response to ER stress, CREBH is cleaved by site-1 and site-2 proteases to liberate an amino-terminal fragment that transits to the nucleus to activate transcription of the genes encoding serum amyloid P-component (SAP) and C-reactive protein (CRP). Proinflammatory cytokines and lipopolysaccharide activate the UPR and induce cleavage of CREBH in the liver in vivo. Together, our studies delineate a molecular mechanism for activation of an ER-localized transcription factor, CREBH, and reveal an unprecedented link by which ER stress initiates an acute inflammatory response.