The relation of the activity of the microsomal enzyme, 3-hydroxy-3-methylglutaryl coenzyme A reductase, to cellular phospholipid composition was studied in C-6 glial cells cloned from a rat glucoma. Phospholipid composition composition was perturbed by growth of cells in the naturally occurring amino alcohol, N,N-dimethylethanolamine. After growth of C-6 glia in 5 mM N,N-dimethylethanolamine for 24 h, reductase activity was diminished by 50%. A similar diminution in cholesterol synthesis was observed. This effect was not accompanied by any parallel change in cell growth, DNA synthesis, protein synthesis, fatty acid synthetase activity, microsomal NADPH-cytochrome c reductase activity. The inhibition of reductase activity by N,N-dimethylethanolamine was prevented by the addition of equimolar concentrations of choline to the culture medium and, also, could be reversed completely by removal of N,N-dimethylethanolamine from the culture medium. The effect of N,N-dimethylethanolamine on reductase was associated with the formation of phosphatidyl-N,N-dimethylethanolamine which accumulated primarily at the expense of phosphatidylcholine and, after 24 h, accounted for 27% of total phospholipid phosphorus. Incorporation of N,N-dimethylethanolamine into the polar head group of cellular phospholipids has a major impact on the regulation of the reductase. These observations may have particular relevance for the mechanisms of regulation of this enzyme, the cellular adaptation to alterations in membrane lipid composition and the regulation of cholesterol synthesis in the developing nervous system.