Stearoyl-coenzyme A desaturase-1 (SCD1) has an important role in lipid metabolism, and SCD1 inhibitors are potential therapeutic agents for the treatment of metabolic diseases and cancers. Here we report the 3.25-Å crystal structure of human SCD1 in complex with its substrate, stearoyl-coenzyme A, which defines the new SCD1 dimetal catalytic center and reveals the determinants of substrate binding to provide insights into the catalytic mechanism of desaturation of the stearoyl moiety. The structure also provides a mechanism for localization of SCD1 in the endoplasmic reticulum: human SCD1 folds around a tight hydrophobic core formed from four long α-helices that presumably function as an anchor spanning the endoplasmic reticulum membrane. Furthermore, our results provide a framework for the rational design of pharmacological inhibitors targeting the SCD1 enzyme.