3-Hydroxy-3-methylglutaryl coenzyme A (HMG CoA) reductase is the limiting enzyme step in cholesterol formation in mammalian liver and other tissues. It is a glycoprotein of 97,000 daltons embedded in the endoplasmic reticulum with a long cytoplasmic extension that is the site of catalytic conversion of HMG CoA to mevalonate. The enzyme is subject to both long-term (induction/repression; degradation) and short-term control (reversible phosphorylation) mediated by endocrine signaling (insulin, glucagon) and through negative feedback by metabolic products of mevalonate (e.g., cholesterol). The catalytic capacity of microsomal reductase falls rapidly in the presence of several protein kinases (reductase kinase, protein kinase-C, calmodulin-dependent protein kinase). Activity is restored with various protein phosphatases. Increased phosphorylation of reductase in intact cells after addition of glucagon or mevalonate is followed by enhanced degradation of the enzyme. In an in vitro model system, phosphorylated, native microsomal reductase is more rapidly cleaved by the calcium-dependent, neutral protease calpain than the dephosphorylated from of reductase. Our present research which centers on the mechanism of the in vitro model system is reviewed. Calpain in the presence of Ca2+ cleaves the cytosolic domain of phosphorylated 97 kDa reductase at two points giving rise to two fragments of nearly the same size that appear as a 52-56,000 dalton doublet by electrophoresis and immunoblotting. In the same system native reductase labeled with [gamma-32P]ATP generates a doublet with 32P solely in the upper (heavier) band. This indicates that serine phosphorylation sites lie between the two calpain cleavage loci. These are positioned in the "linker" region of the long carboxy-terminal cytosolic domain near the membrane. This segment possesses five invariant serine residues and two PEST sequences (constellations of proline, glutamate, serine and threonine) that are characteristic of proteins with short half-lives. If phosphorylation of HMG CoA reductase is confined to the linker region, we must look to this domain in order to interpret the resulting conformational changes that markedly influence reductase catalytic activity and prepare the enzyme for degradation.