ABSTRACT Sterols play critical roles in various membrane fusion events, including soluble NSF attachment protein receptor‐mediated membrane fusion, mainly by modulating the physical properties of biologic membranes; however, it remains unclear whether they also function in atlastin‐mediated endoplasmic reticulum (ER) membrane fusion. Although ergosterol, the major sterol in yeast, is essential for fusion of Sey1p (yeast atlastin)‐containing liposomes with an ER‐mimicking lipid composition, fusion of phosphatidylcholine/phosphatidylserine liposomes does not require sterols. Here, we examined whether sterols are important for Sey1p‐mediated ER fusion in Saccharomyces cerevisiae using an in vitro ER fusion assay with isolated yeast ER microsomes. Ergosterol‐specific ligands inhibited microsome fusion, indicating that ergosterol is critical for ER fusion. However, microsomes isolated from yeast strains lacking genes that encode enzymes involved in synthesis of ergosterol from lanosterol still fused, suggesting that other sterols can replace ergosterol and support Sey1p‐mediated ER fusion. Importantly, disruption of sterol‐binding motifs in the transmembrane regions of Sey1p markedly reduced ER fusion. Sey1p physically interacted with Erg11p and Erg4p, which function in ergosterol biosynthesis, suggesting that Sey1p recruits ergosterol‐synthesizing enzymes to fusion sites and thereby enriches ergosterol, which, in turn, may recruit more Sey1p. This positive feedback loop may facilitate ER membrane fusion by concentrating fusion factors at fusion sites.—Lee, M., Moon, Y., Lee, S., Lee, C., Jun, Y. Ergosterol interacts with Sey1p to promote atlastin‐mediated endoplasmic reticulum membrane fusion in Saccharomyces cerevisiae . FASEB J. 33, 3590–3600 (2019). www.fasebj.org