Doxorubicin is used extensively for chemotherapy of diverse types of cancer, yet the mechanism through which it inhibits proliferation of cancer cells remains unclear. Here we report that doxorubicin stimulates de novo synthesis of ceramide, which in turn activates CREB3L1, a transcription factor synthesized as a membrane-bound precursor. Doxorubicin stimulates proteolytic cleavage of CREB3L1 by Site-1 Protease and Site-2 Protease, allowing the NH2-terminal domain of CREB3L1 to enter the nucleus where it activates transcription of genes encoding inhibitors of the cell cycle, including p21. Knockdown of CREB3L1 mRNA in human hepatoma Huh7 cells and immortalized human fibroblast SV589 cells conferred increased resistance to doxorubicin, whereas overexpression of CREB3L1 in human breast cancer MCF-7 cells markedly enhanced the sensitivity of these cells to doxorubicin. These results suggest that measurement of CREB3L1 expression may be a useful biomarker in identifying cancer cells sensitive to doxorubicin. DOI: http://dx.doi.org/10.7554/eLife.00090.001, eLife digest Cancer is a broad term to describe over 200 diseases that are caused by cells proliferating in an out-of-control manner. Cell replication and division are normally very tightly regulated, and as cells become old, damaged or mutated, they are either repaired or undergo programmed cell death (apoptosis). However, if defective cells continue to replicate, the resulting clusters of abnormal cells can become cancerous. With so many different types of cancer, there is no ‘magic bullet’ to cure all of them. Many cancer therapies are targeted, relying on drugs that block the spread of cancer by interfering with specific molecules involved in the growth and progression of certain tumors. However, the fact that diseased cells replicate faster than normal cells in many forms of cancer makes it possible to use non-specific drugs, such as doxorubicin, to treat tumors when targeted therapies are not available. Doxorubicin can induce DNA breaks in a variety of different cancers by inhibiting the activity of topoisomerase II but a consistent relationship between the inhibition of this enzyme and the blocking of cell proliferation has not been established. This lack of understanding of the mechanism through which doxorubicin inhibits cell proliferation makes it difficult to identify cancer patients who are most likely to benefit from doxorubicin treatment. Denard et al. have now shown that doxorubicin blocks cell replication by cleaving a transcription factor called CREB3L1. This latest work builds on previous work in which they showed that cleavage of this transcription factor can inhibit the replication of cells infected with hepatitis C virus. It has been known since 2000 that CREB3L1 is a membrane protein with one end inside the lumen of the endoplasmic reticulum, and the other end (which is terminated with an NH2 group) in the cytosol of the cell. When CREB3L1 is cleaved, the NH2-terminal domain travels into the nucleus of the cell, where it drives the transcription of genes that suppress the cell cycle. Denard et al. clearly show that doxorubicin triggers the cleavage of CREB3L1 by stimulating the production of ceramide molecules. Thus, It might be possible, with further research, to use CREB3L1 as a biomarker to identify tumors that are suitable for treatment by doxorubicin. DOI: http://dx.doi.org/10.7554/eLife.00090.002