Supernatant protein factor (SPF) is a poorly characterized cytosolic protein that stimulates HMG-CoA reductase and squalene monooxygenase in vitro and cholesterol synthesis when expressed in hepatoma cells. The activation of SPF by protein kinases A (PKA) and Cdelta enhances its ability to stimulate these cholesterolgenic enzymes in microsomal preparations. The present studies demonstrate that the ability of SPF to stimulate cholesterol synthesis in cell culture is also modulated by phosphorylation. Addition of dibutyryl-cAMP, a PKA activator, to hepatoma cells expressing SPF increased cholesterol synthesis by 62%, whereas addition of a cell-permeable PKA inhibitor blocked the SPF-mediated increase in cholesterol synthesis. To confirm a role for PKA in the regulation of SPF, substitution of alanine for serine-289 (a putative PKA recognition site) blocked the stimulation of cholesterol synthesis by SPF. Serine-289 is located at the junction of the proposed lipid-binding domain and the carboxyl-terminal Golgi dynamics domain, suggesting that phosphorylation may alter the interaction of these two domains. In a test of this hypothesis, deletion of the Golgi dynamics domain blocked the ability of SPF to stimulate cholesterol synthesis, supporting a role for Golgi in SPF function; this finding was buttressed by the observation that addition of brefeldin A, which disrupts Golgi formation, also abolished the ability of SPF to stimulate cholesterol synthesis. The activation of SPF by PKA suggests that cholesterol synthesis can be rapidly modulated in response to external stimuli by changes in cAMP levels, and that this regulation is dependent on an as yet undefined interaction with Golgi.