Cholesterol is a critical nutrient requiring tight constraint in the endoplasmic reticulum (ER) due to its uniquely challenging biophysical properties. While the mechanisms by which the ER defends against cholesterol insufficiency are well described, it remains unclear how the ER senses and effectively defends against cholesterol excess. Here, we identify the ER-bound transcription factor nuclear factor erythroid 2 related factor-1, Nrf1/Nfe2L1, as a critical mediator of this process. We show that Nrf1 directly binds to and specifically senses cholesterol in the ER through a defined domain and that cholesterol regulates Nrf1 turnover, processing, localization, and activity. In Nrf1 deficiency, in vivo cholesterol challenges induce massive hepatic cholesterol accumulation and damage, which is rescued by replacing Nrf1 exogenously. This Nrf1-mediated mechanism involves the suppression of CD36-driven inflammatory signaling and derepression of liver X receptor activity. These findings reveal Nrf1 as a guardian of cholesterol homeostasis and a core component of adaptive responses to excess cellular cholesterol., (Copyright © 2017. Published by Elsevier Inc.)