Cholesterol biosynthesis is a high-cost process and, therefore, tightly regulated by both transcriptional and posttranslational negative feedback mechanisms in response to the level of cellular cholesterol. Squalene monooxygenase (SM, also known as squalene epoxidase or SQLE) is a rate-limiting enzyme in the cholesterol biosynthetic pathway and catalyzes epoxidation of squalene. The stability of SM is negatively regulated by cholesterol via its N-terminal regulatory domain (SM-N100). In this study, using a SM-luciferase fusion reporter cell line, we performed a chemical genetics screen that identified inhibitors of SM itself as up-regulators of SM. This effect was mediated through the SM-N100 region, competed with cholesterol-accelerated degradation, and required the E3 ubiquitin ligase MARCH6. However, up-regulation was not observed with statins, well-established cholesterol biosynthesis inhibitors, and this pointed to the presence of another mechanism other than reduced cholesterol synthesis. Further analyses revealed that squalene accumulation upon treatment with the SM inhibitor was responsible for the up-regulatory effect. Using photoaffinity labeling, we demonstrated that squalene directly bound to the N100 region, thereby reducing interaction with and ubiquitination by MARCH6. Our findings suggest that SM senses squalene via its N100 domain to increase its metabolic capacity, highlighting squalene as a feedforward factor for the cholesterol biosynthetic pathway.