In mammalian cells, levels of the integral membrane proteins 3-hydroxy-3-methylglutaryl-CoA reductase and Insig-1 are controlled by lipid-regulated endoplasmic reticulum-associated degradation (ERAD). The ERAD of reductase slows a rate-limiting step in cholesterol synthesis and results from sterol-induced binding of its membrane domain to Insig-1 and the highly related Insig-2 protein. Insig binding bridges reductase to ubiquitin ligases that facilitate its ubiquitination, thereby marking the protein for cytosolic dislocation and proteasomal degradation. In contrast to reductase, Insig-1 is subjected to ERAD in lipid-deprived cells. Sterols block this ERAD by inhibiting Insig-1 ubiquitination, whereas unsaturated fatty acids block the reaction by preventing the protein's cytosolic dislocation. In previous studies, we found that the membrane domain of mammalian reductase was subjected to ERAD in Drosophila S2 cells. This ERAD was appropriately accelerated by sterols and required the action of Insigs, which bridged reductase to a Drosophila ubiquitin ligase. We now report reconstitution of mammalian Insig-1 ERAD in S2 cells. The ERAD of Insig-1 in S2 cells mimics the reaction that occurs in mammalian cells with regard to its inhibition by either sterols or unsaturated fatty acids. Genetic and pharmacologic manipulations coupled with subcellular fractionation indicate that Insig-1 and reductase are degraded through distinct mechanisms that are mediated by different ubiquitin ligase complexes. Together, these results establish Drosophila S2 cells as a model system to elucidate mechanisms through which lipid constituents of cell membranes (i.e., sterols and fatty acids) modulate the ERAD of Insig-1 and reductase.