In fission yeast, orthologs of mammalian SREBP and Scap, called Sre1 and Scp1, monitor oxygen-dependent sterol synthesis as a measure of cellular oxygen supply. Under low oxygen conditions, sterol synthesis is inhibited, and Sre1 cleavage is activated. However, the sterol signal for Sre1 activation is unknown. In this study, we characterized the sterol signal for Sre1 activation using a combination of Sre1 cleavage assays and gas chromatography sterol analysis. We find that Sre1 activation is regulated by levels of the 4-methyl sterols 24-methylene lanosterol and 4,4-dimethylfecosterol under conditions of low oxygen and cell stress. Both increases and decreases in the level of these ergosterol pathway intermediates induce Sre1 proteolysis in a Scp1-dependent manner. The SREBP ortholog in the pathogenic fungus Cryptococcus neoformans is also activated by high levels of 4-methyl sterols, suggesting that this signal for SREBP activation is conserved among unicellular eukaryotes. Finally, we provide evidence that the sterol-sensing domain of Scp1 is important for regulating Sre1 proteolysis. The conserved mutations Y247C, L264F, and D392N in Scp1 that render Scap insensitive to sterols cause constitutive Sre1 activation. These findings indicate that unlike Scap, fission yeast Scp1 responds to 4-methyl sterols and thus shares properties with mammalian HMG-CoA reductase, a sterol-sensing domain protein whose degradation is regulated by the 4-methyl sterol lanosterol.