The NH(2)-terminal domains of membrane-bound sterol regulatory element-binding proteins (SREBPs) are released into the cytosol by regulated intramembrane proteolysis, after which they enter the nucleus to activate genes encoding lipid biosynthetic enzymes. Intramembrane proteolysis is catalyzed by Site-2 protease (S2P), a hydrophobic zinc metalloprotease that cleaves SREBPs at a membrane-embedded leucine-cysteine bond. In the current study, we use domain-swapping methods to localize the residues within the SREBP-2 membrane-spanning segment that are required for cleavage by S2P. The studies reveal a requirement for an asparagine-proline sequence in the middle third of the transmembrane segment. We propose a model in which the asparagine-proline sequence serves as an NH(2)-terminal cap for a portion of the transmembrane alpha-helix of SREBP, allowing the remainder of the alpha-helix to unwind partially to expose the peptide bond for cleavage by S2P.