Changes in lipid metabolism are associated with aging and age-related diseases, including proteopathies. The endoplasmic reticulum (ER) is uniquely a major hub for protein and lipid synthesis, making its function essential for both protein and lipid homeostasis. However, it is less clear how lipid metabolism and protein quality may impact each other. Here, we identified <i>
let-767</i>, a putative hydroxysteroid dehydrogenase in <i>Caenorhabditis elegans</i>, as an essential gene for both lipid and ER protein homeostasis. Knockdown of <i>
let-767</i> reduces lipid stores, alters ER morphology in a lipid-dependent manner, and blocks induction of the Unfolded Protein Response of the ER (UPR<sup>ER</sup>). Interestingly, a global reduction in lipogenic pathways restores UPR<sup>ER</sup> induction in animals with reduced <i>
let-767</i>. Specifically, we find that supplementation of 3-oxoacyl, the predicted metabolite directly upstream of <i>
let-767</i>, is sufficient to block induction of the UPR<sup>ER</sup>. This study highlights a novel interaction through which changes in lipid metabolism can alter a cell's response to protein-induced stress.