When newly synthesized, these proteins are embedded in the ER. Only the soluble regulatory domain fragment of an SREBP functions as a transcription activator. When cholesterol and oxysterol levels are high, SREBPs are held in the ER in a complex with another protein called SREBP cleavage-activating protein (SCAP), which in turn is anchored in the ER membrane by its interaction with a third membrane protein, Insig (insulin-induced gene protein).

SCAP and Insig act as sterol sensors. When sterol levels are high, the Insig-SCAP-SREBP complex is retained in the ER membrane. When the level of sterols in the cell declines, the SCAP-SREBP complex is escorted by secretory proteins to the Golgi complex.

There, two proteolytic cleavages of SREBP release a regulatory fragment, which enters the nucleus and activates transcription of its target genes, including those for HMG-CoA reductase, the LDL receptor protein, and other proteins needed for lipid synthesis.

When sterol levels increase sufficiently, the proteolytic release of SREBP amino-terminal domains is again blocked, and proteasome degradation of the existing active domains results in rapid shutdown of the gene targets.