Acyl-coenzyme A: cholesterol acyltransferase (ACAT) is an intracellular enzyme that produces cholesteryl esters in various tissues. In mammals, two ACAT genes (ACAT1 and ACAT2) have been identified. Together, these two enzymes are involved in storing cholesteryl esters as lipid droplets, in macrophage foam-cell formation, in absorbing dietary cholesterol, and in supplying cholesteryl esters as part of the core lipid for lipoprotein synthesis and assembly. The key difference in tissue distribution of ACAT1 and ACAT2 between humans, mice and monkeys is that, in adult human liver (including hepatocytes and bile duct cells), the major enzyme is ACAT1, rather than ACAT2. There is compelling evidence implicating a role for ACAT1 in macrophage foam-cell formation, and for ACAT2 in intestinal cholesterol absorption.Ubiquitin linkage to cysteine is an unconventional modification targeting protein for degradation. However, the physiological regulation of cysteine ubiquitylation is still mysterious. Here we found that ACAT2, a cellular enzyme converting cholesterol and fatty acid to cholesteryl esters, was ubiquitylated on Cys277 for degradation when the lipid level was low. gp78-Insigs catalysed Lys48-linked polyubiquitylation on this Cys277. A high concentration of cholesterol and fatty acid, however, induced cellular reactive oxygen species (ROS) that oxidized Cys277, resulting in ACAT2 stabilization and subsequently elevated cholesteryl esters. Furthermore, ACAT2 knockout mice were more susceptible to high-fat diet-associated insulin resistance. By contrast, expression of a constitutively stable form of ACAT2 (C277A) resulted in higher insulin sensitivity. ACAT2 is an appealing target for therapy to reduce coronary heart disease.