Animal cells acquire cholesterol from receptor-mediated uptake of low-density lipoprotein (LDL), which releases cholesterol in lysosomes. The cholesterol moves to the endoplasmic reticulum (ER), where it inhibits production of LDL receptors, completing a feedback loop. Here we performed a CRISPR-Cas9 screen in human SV589 cells for genes required for LDL-derived cholesterol to reach the ER. We identified the gene encoding PTDSS1, an enzyme that synthesizes phosphatidylserine (PS), a phospholipid constituent of the inner layer of the plasma membrane (PM). In PTDSS1-deficient cells where PS is low, LDL cholesterol leaves lysosomes but fails to reach the ER, instead accumulating in the PM. The addition of PS restores cholesterol transport to the ER. We conclude that LDL cholesterol normally moves from lysosomes to the PM. When the PM cholesterol exceeds a threshold, excess cholesterol moves to the ER in a process requiring PS. In the ER, excess cholesterol acts to reduce cholesterol uptake, preventing toxic cholesterol accumulation. These studies reveal that one lipid—PS—controls the movement of another lipid—cholesterol—between cell membranes. We relate these findings to recent evidence indicating that PM-to-ER cholesterol transport is mediated by GRAMD1/Aster proteins that bind PS and cholesterol.