Sterol levels affect the expression of many genes in yeast and humans. We found that the paralogous transcription factors Upc2p and Ecm22p of yeast were sterol regulatory element (SRE) binding proteins (SREBPs) responsible for regulating transcription of the sterol biosynthetic genes ERG2 and ERG3. We defined a 7-bp SRE common to these and other genes, including many genes involved in sterol biosynthesis. Upc2p and Ecm22p activated ERG2 expression by binding directly to this element in the ERG2 promoter. Upc2p and Ecm22p may thereby coordinately regulate genes involved in sterol homeostasis in yeast. Ecm22p and Upc2p are members of the fungus-specific Zn[2]-Cys[6] binuclear cluster family of transcription factors and share no homology to the analogous proteins, SREBPs, that are responsible for transcriptional regulation by sterols in humans. These results suggest that Saccharomyces cerevisiae and human cells regulate sterol synthesis by different mechanisms.