The synthesis and uptake of cholesterol requires transcription factors designated sterol regulatory element-binding proteins (SREBPs). SREBPs are bound to membranes in a hairpin orientation with their transcriptionally active NH2-terminal segments facing the cytosol. The NH2-terminal segments are released from membranes by two-step proteolysis initiated by site 1 protease (S1P), which cleaves in the luminal loop between two membrane-spanning segments. Next, site 2 protease (S2P) releases the NH2-terminal fragment of SREBP. The S2P gene was recently isolated by complementation cloning using Chinese hamster ovary cells that require cholesterol for growth, due to a mutation in the S2P gene. A similar approach cannot be used for S1P because all previous cholesterol auxotrophs manifest defects in S2P, which is encoded by a single copy gene. To circumvent this problem, in the current studies we transfected Chinese hamster ovary cells with the S2P cDNA, assuring multiple copies. We mutagenized the cells, selected for cholesterol auxotrophy, and identified two mutant cell lines (SRD-12A and -12B) that fail to cleave SREBPs at site 1. Complementation analysis demonstrated that the defects in both cell lines are recessive and noncomplementing, indicating a mutation in the same gene. These cells should now be useful for expression cloning of the sterol-regulated S1P gene.