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 cooperativity-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 CE domains and reduces SREBP2 activation under cholesterol-limiting conditions. Thus, the balance between SOAT1/NCEH1 activities 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.