The cholesterol analogue 25-hydroxycholesterol kills animal cells by blocking the proteolytic activation of two sterol-regulated transcription factors designated sterol regulatory element binding protein-1 and -2 (SREBP-1 and SREBP-2). These proteins, each approximately 1150 amino acids in length, are embedded in the membranes of the nucleus and endoplasmic reticulum by virtue of hydrophobic COOH-terminal segments. In cholesterol-depleted cells the proteins are cleaved to release soluble NH2-terminal fragments of approximately 480 amino acids that enter the nucleus and activate genes encoding the low density lipoprotein receptor and enzymes of cholesterol synthesis. 25-Hydroxycholesterol blocks this cleavage, and cells die of cholesterol deprivation. We previously described a mutant 25-hydroxycholesterol-resistant hamster cell line (SRD-1 cells) in which the SREBP-2 gene had undergone a recombination between the intron following codon 460 and an intron in an unrelated gene. The SREBP-2 sequence terminated at residue 460, eliminating the membrane attachment domain and producing a constitutively active factor that no longer required proteolysis and thus was not inhibited by 25-hydroxycholesterol. Here, we report that two additional sterol-resistant cell lines (SRD-2 and SRD-3) have also undergone genomic rearrangements in the intron following codon 460 of the SREBP-2 gene. Although the molecular rearrangements differ in the three mutant lines, each leads to the production of a constitutively active transcription factor whose SREBP-2 sequence terminates at residue 460. These findings provide a dramatic illustration of the advantage that introns provide in allowing proteins to gain new functions in response to new environmental challenges.