Abstract: The ARV1-encoded protein mediates sterol transport from the endoplasmic reticulum (ER) to the plasma membrane. Yeast ARV1 mutants accumulate multiple lipids in the ER and are sensitive to pharmacological modulators of both sterol and sphingolipid metabolism. Using fluorescent and electron microscopy, we demonstrate sterol accumulation, subcellular membrane expansion, elevated lipid droplet formation and vacuolar fragmentation in ARV1 mutants. Motif-based regression analysis of ARV1 deletion transcription profiles indicates activation of Hac1p, an integral component of the UPR. Accordingly, we show constitutive splicing of HAC1 transcripts, induction of a UPR reporter and elevated expression of UPR targets in ARV1 mutants. IRE1, encoding the unfolded protein sensor in the ER lumen, exhibits a lethal genetic interaction with ARV1, indicating a viability requirement for the UPR in cells lacking ARV1. Surprisingly, ARV1 mutants expressing a variant of Ire1p defective in sensing unfolded proteins are viable. Moreover these strains also exhibit constitutive HAC1 splicing that interacts with DTT-mediated perturbation of protein folding. These data suggest a component of UPR induction in arv1Delta strains is distinct from protein misfolding. Decreased ARV1 expression in murine macrophages also results in UPR induction, particularly up-regulation of activating transcription factor-4, C/EBP homologous protein (CHOP) and apoptosis. Cholesterol loading or inhibition of cholesterol esterification further elevated CHOP expression in ARV1 knockdown cells. Thus, loss or down-regulation of ARV1 disturbs membrane and lipid homeostasis resulting in a disruption of ER integrity, one consequence of which is induction of the UPR.