Statins are compounds prescribed to lower blood cholesterol in millions of patients worldwide. They act by inhibiting HMG-CoA reductase, the rate-limiting enzyme in the mevalonate pathway that leads to the synthesis of farnesyl pyrophosphate, a precursor for cholesterol synthesis and the source of lipid moieties for protein prenylation. The nematode Caenorhabditis elegans possesses a mevalonate pathway that lacks the branch leading to cholesterol synthesis, and thus represents an ideal organism to specifically study the noncholesterol roles of the pathway. Inhibiting HMG-CoA reductase in C. elegans using statins or RNAi leads to developmental arrest and loss of membrane association of a GFP-based prenylation reporter. The unfolded protein response (UPR) is also strongly activated, suggesting that impaired prenylation of small GTPases leads to the accumulation of unfolded proteins and ER stress. UPR induction was also observed upon pharmacological inhibition of farnesyl transferases or RNAi inhibition of a specific isoprenoid transferase (M57.2) and found to be dependent on both ire-1 and xbp-1 but not on pek-1 or atf-6, which are all known regulators of the UPR. The lipid stores and fatty acid composition were unaffected in statin-treated worms, even though they showed reduced staining with Nile red. We conclude that inhibitors of HMG-CoA reductase or of farnesyl transferases induce the UPR by inhibiting the prenylation of M57.2 substrates, resulting in developmental arrest in C. elegans. These results provide a mechanism for the pleiotropic effects of statins and suggest that statins could be used clinically where UPR activation may be of therapeutic benefit.