The pivotal event for sterol-induced degradation of the cholesterol biosynthetic enzyme HMG-CoA reductase is binding of its membrane domain to Insig proteins in the endoplasmic reticulum. Insigs are carriers for gp78, an E3 ubiquitin ligase that marks reductase for proteasomal degradation. We report here the isolation of mutant Chinese hamster ovary cell lines, designated SRD-16, -17, and -18, in which sterol-induced ubiquitination and degradation of reductase are severely impaired. These cells were produced by chemical mutagenesis and selection with SR-12813, a compound that mimics sterols in stimulating ubiquitination and degradation of reductase. Each SRD cell line was found to contain a point mutation in one reductase allele, resulting in substitutions of aspartate for serine-60 (SRD-16), arginine for glycine-87 (SRD-17), and proline for alanine-333 (SRD-18). Sterols failed to promote ubiquitination and degradation of these reductase mutants, owing to their decreased affinity for Insigs. Thus, three different point mutations in reductase, all of which localize to the membrane domain, disrupt Insig binding and abolish sterol-accelerated degradation of the enzyme.