The largest and most dynamic endomembrane compartment in eukaryotic cells is the endoplasmic reticulum (ER). This organelle is the site of protein folding, lipid synthesis, and drug detoxification, among other vital cellular processes. The size and shape of the ER is continually adjusted to accommodate cellular need. This can be observed under a wide variety of circumstances, ranging from complex cellular differentiation processes, to simple increases in the expression of single ER membrane proteins. Despite the amenability of this phenomenon to observation, the underlying mechanisms have largely eluded researchers. HMG-CoA reductase (HMGR) catalyzes the rate-limiting step in sterol biosynthesis and is used throughout this work as a model to study ER rearrangement and expansion. By utilizing the Hmg2p isozyme of S. cerevisiae, we have identified the features of this protein that are required to reorganize the ER into elaborate, highly structured membrane arrays. Using this information, we designed and executed a screen to identify genes required for Hmg2p-induced ER formation. Our analysis of the effects of Hmg2p on cellular membranes is extended to a biochemical analysis of the abundance and composition of total cellular phospholipids. In this way, we clearly delineate the difference between membrane reorganization and membrane proliferation. Furthermore, we demonstrate the requirement of a phospholipid biosynthetic enzyme, PSD1, for the Hmg2p-induced changes in ER structure as well as phospholipid abundance and composition. This is the first analysis to reveal a genetic connection between the ER structures generated by increased expression of Hmg2p, and phospholipid biosynthesis.