Cellular quality control requires recognition of common features of misfolding, and so is not typically associated with the specific targeting of individual proteins. However, physiologically regulated degradation of yeast HMG-CoA reductase (Hmg2p) occurs by the HRD endoplasmic reticulum quality control pathway, implying that Hmg2p undergoes a regulated transition to a quality control substrate in response to a sterol pathway molecule. Using in vitro structural assays, we now show that the pathway derivative farnesol causes Hmg2p to undergo a change to a less folded structure. The effect is reversible, biologically relevant by numerous criteria, highly specific for farnesol structure, and requires an intact Hmg2p sterol-sensing domain. This represents a distinct lipid-sensing function for this highly conserved motif that suggests novel approaches to cholesterol management. More generally, our observation of reversible small-molecule-mediated misfolding may herald numerous examples of regulated quality control to be discovered in biology or applied in the clinic.