The lipid composition of animal cells is controlled by SREBPs, transcription factors released from membranes by sterol-regulated proteolysis. Release is initiated by Site-1 protease (S1P), which cleaves SREBPs in the ER luminal loop between two membrane-spanning regions. To clone S1P, we prepared pCMV-PLAP-BP2, which encodes a fusion protein that contains placental alkaline phosphatase (PLAP) in the ER lumen flanked by cleavage sites for signal peptidase and S1P. In sterol-deprived cells, cleavage by both proteases leads to PLAP secretion. PLAP is not secreted by SRD-12B cells, cholesterol auxotrophs that lack S1P. We transfected SRD-12B cells with pCMV-PLAP-BP2 plus pools of CHO cDNAs and identified a cDNA that restores Site-1 cleavage and PLAP secretion. The cDNA encodes S1P, an intraluminal 1052-amino-acid membrane-bound subtilisin-like protease. We propose that S1P is the sterol-regulated protease that controls lipid metabolism in animal cells.