A previously described mutant line of Chinese hamster ovary cells, designated SRD-4, fails to synthesize cholesteryl esters, owing to a deficiency in the activity of acyl-CoA:cholesterol acyltransferase (ACAT). These cells also fail to suppress low density lipoprotein receptors or cholesterol synthesizing enzymes in the presence of 25-hydroxycholesterol. In the current studies we show that SRD-4 cells have three defects: 1) a point mutation in one allele at the ACAT locus that changes codon 265 from Ser to Leu, resulting in an inactive enzyme; 2) a silent allele at the other ACAT locus that does not produce detectable mRNA; and 3) a mutation, as yet undefined, that abolishes the ability of 25-hydroxycholesterol to inhibit the cleavage of both sterol regulatory element binding proteins (SREBP-1 and SREBP-2). Correction of the ACAT deficiency by transfection of a wild-type cDNA failed to restore inhibition of SREBP cleavage by 25-hydroxycholesterol, indicating that the ACAT deficiency and the sterol regulatory defect are caused by independent mutations. These data provide further insight into the interplay between ACAT activation and inhibition of SREBP cleavage by 25-hydroxycholesterol, and they indicate that these two processes can be disrupted independently by mutation.