X-linked adrenoleukodystrophy (X-ALD) is a severe neurodegenerative disorder with impaired very long-chain fatty acid (VLCFA) metabolism. The disease-associated ABCD1 (ALD) gene encodes a peroxisomal membrane protein, which belongs to the superfamily of ATP-binding cassette transporters. Several treatment regimes have been tried without satisfactory clinical benefit. Recently, the cholesterol-lowering drug lovastatin was reported to normalize VLCFA levels in two out of three clinical studies. This investigation aimed to disclose the molecular mechanism of successful reduction of VLCFA accumulation in order to fill in the gap in the understanding how dietary cholesterol lowering affects the levels of VLCFA in patients with X-ALD and to allow more efficacious treatment. Overexpression of ABCD2 (ALDR), the closest relative of ABCD1, restores VLCFA accumulation in cultured ABCD1-deficient cells. Here we show by real-time PCR that the ABCD2 gene is induced in cultured human fibroblasts and monocytes upon sterol depletion via a mechanism requiring the activation of sterol regulatory element-binding proteins (SREBPs), a family of transcription factors that control the metabolism of cholesterol and fatty acids. This is unexpected and the first report that extends the mechanism of transcriptional regulation by SREBPs to a peroxisomal protein, thus providing a closer link between peroxisomes, cholesterol and fatty acid biosynthesis. Using reporter gene studies, site-directed mutagenesis and gel shift assays, we identified a functional sterol regulatory element in the proximal promoter region of ABCD2. Finally, we demonstrated that ABCD2 induction by sterol depletion significantly reduced the accumulation of VLCFA in X-ALD fibroblasts. Thus, lowering cholesterol leads to SREBP maturation, increased ABCD2 expression and reduced VLCFA accumulation.