After permeability barrier perturbation there is an increase in the mRNA levels for key enzymes necessary for lipid synthesis in the epidermis. The mechanism(s) responsible for this regulation is unknown. Sterol regulatory element binding proteins-1a, 1c, and -2 (SREBPs) control the transcription of enzymes required for cholesterol and fatty acid synthesis in response to modulations of sterol levels. We now demonstrate that SREBP-2 is the predominant SREBP in human keratinocytes and murine epidermis, while SREBP-1 is not detected. Sterols regulate SREBP-2 mRNA levels in keratinocytes and the epidermis and the proteolytic cleavage of SREBP-2 to the mature active form in keratinocytes. In parallel to the increase in mature active SREBP, there is a coordinate increase in mRNA levels for cholesterol (HMG-CoA reductase, HMG-CoA synthase, farnesyl diphosphate synthase, and squalene synthase) and fatty acid (acetyl-CoA carboxylase, fatty acid synthase) synthetic enzymes. However, mRNA levels for serine palmitoyl transferase (SPT), the first committed step for ceramide synthesis, do not increase in parallel. The increase of mRNA for enzymes required for epidermal cholesterol and fatty acid synthesis is consistent with both the previously described early increase of cholesterol and fatty acid synthesis after barrier disruption and a role for SREBP-2 in the regulation of cholesterol and fatty acid synthesis for epidermal barrier homeostasis. In contrast, SPT appears to be regulated by different mechanisms, consistent with the different time course of its stimulation after barrier disruption.—Harris, I. R., A. M. Farrell, W. M. Holleran, S. Jackson, C. Grunfeld, P. M. Elias, and K. R. Feingold. Parallel regulation of sterol regulatory element binding protein-2 and the enzymes of cholesterol and fatty acid synthesis but not ceramide synthesis in cultured human keratinocytes and murine epidermis.