Two genes that encode enzymes in cholesterol biosynthesis, 3-hydroxy-3-methylglutaryl-coenzyme A (HMG-CoA) reductase and HMG-CoA synthase, and the gene encoding the low density lipoprotein (LDL) receptor are repressed when sterols accumulate in animal cells. Their 5'-flanking regions contain a common element, designated sterol regulatory element-1 (SRE-1). In the HMG-CoA synthase and LDL receptor promoters, the SRE-1 enhances transcription in the absence of sterols and is inactivated in the presence of sterols. In the HMG-CoA reductase promoter, the region containing the SRE-1 represses transcription when sterols are present. In the current studies, we show that the SRE-1 retains enhancer function but loses sterol sensitivity in mutant Chinese hamster ovary cells that are resistant to the repressor, 25-hydroxycholesterol. In the absence of sterols, the mutant cells produced high levels of all three sterol-regulated mRNAs, and there was no repression by 25-hydroxycholesterol. When transfected with plasmids containing each of the regulated promoters fused to a bacterial reporter gene, the mutant cells showed high levels of transcription in the absence of sterols and no significant repression by sterols. When the SRE-1 in the LDL receptor and HMG-CoA synthase promoters was mutated prior to transfection into the mutant cells, transcription was markedly reduced. Thus, the 25-hydroxycholesterol-resistant cells retain a protein that enhances transcription by binding to the SRE-1 in the absence of sterols, but they have lost the function of a protein that abolishes this enhancement in the presence of sterols. Mutation of a 30-base pair segment of the HMG-CoA reductase promoter that contains the SRE-1 did not reduce transcription in the mutant cells, indicating that this promoter is driven by elements other than the SRE-1. Nevertheless, this promoter failed to be repressed by sterols in the mutant cells. These data suggest that a common factor mediates the effects of sterols on the SRE-1 in all three promoters and that this factor has been functionally lost in the 25-hydroxycholesterol-resistant cells.