TRC8 (translocation in renal cancer from chromosome 8) is an intrinsic protein of the endoplasmic reticulum that contains a sterol-sensing domain and a RING finger motif encoding an E3 ubiquitin ligase. Here we show that TRC8 overexpression hinders sterol regulatory element-binding protein-2 (SREBP-2) processing, thereby reducing SREBP-2 target gene expression, TRC8 depletion has the opposite effect. Mutation analyses of TRC8 reveal that the ubiquitin ligase activity is dispensable for these effects. Activating transcription factor 6 (ATF6) is also processed in the Golgi by the same two proteases as those for SREBP, but ATF6 processing is not affected by TRC8. TRC8 is capable of binding both SREBP-2 and SREBP cleavage-activated protein (SCAP), thereby forming a TRC8.SREBP-2.SCAP complex. This complex formation hampers the interaction between SCAP and Sec24, one of the COPII proteins that are involved in SREBP-2 transport to the Golgi, thereby reducing SREBP-2 cleavage. TRC8 conjugated by ubiquitin is unstable, whereas the mutant TRC8, lacking the E3 ubiquitin ligase activity and only slightly modified by ubiquitin, is quite stable. TRC8 becomes stable when cells are cultured with a proteasome inhibitor or under a lipoprotein-depleted condition. Lipoprotein depletion impairs ubiquitination of TRC8. Taken together, TRC8 is a novel sterol-sensing endoplasmic reticulum membrane protein that hinders SREBP-2 processing through interaction with SREBP-2 and SCAP, regulating its own turnover rate by means of its E3 ubiquitin ligase activity.