ER cholesteryl ester phase separation underlies switch-like cholesterol sensing

Cellular lipid homeostasis requires mechanisms that detect subtle changes in lipid abundance and trigger rapid, coordinated responses. The INSIG/SCAP/SREBP2 pathway provides a central feedback system linking endoplasmic reticulum (ER) cholesterol levels to the transcriptional control of cholesterol genes, yet the origin of its remarkable cooperative switch mechanism remains unclear. Here we identify cholesterol esterification as a physical mechanism that amplifies sterol sensing and generates switch-like pathway regulation. We show that cholesteryl oleate (CE), produced by SOAT1 and opposed by NCEH1-mediated hydrolysis, undergoes a cooperative phase transition within the ER membrane to form transient CE-rich domains. These lipid assemblies create a threshold-dependent platform that concentrates SCAP and promotes formation of the SCAP-INSIG retention complex, thereby coupling ER lipid organization to SREBP inhibition. Because CE domain formation is nucleation-driven, variations in cholesterol availability are converted into an abrupt transition between distinct membrane states. Perturbing CE metabolism uncouples cholesterol abundance from pathway activity: SOAT1 inhibition prevents CE domain formation, releases SCAP from the ER, and activates SREBP2 despite cholesterol sufficiency, whereas NCEH1 inhibition stabilizes the domains and reduces SREBP2 activation under cholesterol-limiting conditions. Thus, the balance between esterification and hydrolysis determines a membrane physical state that serves as the functional output sensed by the cholesterol regulatory machinery. Our findings reveal ER lipid phase transitions as a general principle for creating ultrasensitive control in cellular homeostasis and establish cholesterol esterification as an active regulatory process rather than a passive storage pathway.