Sterol is an abundant component of eukaryotic cell membranes and is thought to influence membrane properties such as permeability, fluidity and microdomain formation. Drosophila is an excellent model system in which to study functional requirements for membrane sterol because, although it does not synthesize sterol, it nevertheless requires sterols to complete development. Moreover, Drosophila normally incorporates sterols into cell membranes. Thus, dietary sterol depletion can be used to specifically reduce membrane sterol levels. In contrast, vertebrates do synthesize cholesterol. In this way, sterol depletion in vertebrates demand the use of approaches such as chemical extractions, drug treatments or genetic manipulation which are prone to have side effects. We have controlled the level and type of dietary sterol available to developing Drosophila larvae in order to investigate the requirement for sterol in cell membranes, and to distinguish it from the function of sterol as a precursor for signaling molecules. Strikingly, we show that membrane sterol levels can be reduced 6-fold in most tissues without affecting cell or larval viability. Larvae respond to sterol depletion by arresting their growth and development, and by increasing the level of specific sphingolipid variants that promote survival when sterol is scarce. Thus, non-sterol lipids are able to substitute for sterols in the maintenance of basic membrane biophysical properties required for life. Despite this, Drosophila larvae regulate their growth to maintain membrane sterol levels within tight limits. The existence of this novel membrane sterol-dependent growth control mechanism indicates an important role for bulk membrane sterol in the tissue specific functions of differentiated cells.