Mutants of neuroserpin are retained as polymers within the endoplasmic reticulum (ER) of neurones to cause the autosomal dominant dementia familial encephalopathy with neuroserpin inclusion bodies or FENIB. The cellular consequences are unusual in that the ordered polymers activate the ER overload response (EOR) in the absence of the canonical unfolded protein response. We use both cell lines and Drosophila models to show that the G392E mutant of neuroserpin that forms polymers is degraded by UBE2j1 E2 ligase and Hrd1 E3 ligase while truncated neuroserpin, a protein that lacks 132 amino acids, is degraded by UBE2g2 (E2) and gp78 (E3) ligases. The degradation of G392E neuroserpin results from SREBP-dependent activation of the cholesterol biosynthetic pathway in cells that express polymers of neuroserpin (G392E). Inhibition of HMGCoA reductase, the limiting enzyme of the cholesterol biosynthetic pathway, reduced the ubiquitination of G392E neuroserpin in our cell lines and increased the retention of neuroserpin polymers in both HeLa cells and primary neurones. Our data reveal a reciprocal relationship between cholesterol biosynthesis and the clearance of mutant neuroserpin. This represents the first description of a link between sterol metabolism and modulation of the proteotoxicity mediated by the EOR.