How amphipathic phospholipids are shuttled between the membrane bilayer remains an essential but elusive process, particularly at the endoplasmic reticulum (ER). One prominent phospholipid shuttling process concerns the biogenesis of APOB-containing lipoproteins within the ER lumen, which may require bulk trans-bilayer movement of phospholipids from the cytoplasmic leaflet of the ER bilayer. Here, we show that TMEM41B, present in the lipoprotein export machinery, encodes a previously conceptualized ER lipid scramblase mediating trans-bilayer shuttling of bulk phospholipids. Loss of hepatic TMEM41B eliminates plasma lipids, due to complete absence of mature lipoproteins within the ER, but paradoxically also activates lipid production. Mechanistically, scramblase deficiency triggers unique ER morphological changes and unsuppressed activation of SREBPs, which potently promotes lipid synthesis despite stalled secretion. Together, this response induces full-blown nonalcoholic hepatosteatosis in the TMEM41B-deficient mice within weeks. Collectively, our data uncovered a fundamental mechanism safe-guarding ER function and integrity, dysfunction of which disrupts lipid homeostasis. Display omitted •TMEM41B associates with lipoproteins and encodes an ER lipid scramblase•Hepatic TMEM41B is required for lipoprotein biogenesis and lipid homeostasis•TMEM41B deficiency triggers drastic morphological changes of the ER membrane•TMEM41B deficiency causes unsuppressed SREBP activation and full-blown NASH Chen and colleagues showed that TMEM41B encodes an ER lipid scramblase and executes a produce-and-protect mechanism for ER function and integrity. Deficiency of TMEM41B triggers severe metabolic defects independent of the canonical ER stress pathway and potently promotes lipid synthesis.