The intimate association between the endoplasmic reticulum (ER) and mitochondrial membranes at ER-Mitochondria contact sites (ERMCS) is a platform for critical cellular processes, particularly lipid synthesis. How contacts are remodeled and the impact of altered contacts on lipid metabolism remains poorly understood. We show that the p97 AAA-ATPase and its adaptor ubiquitin-X domain adaptor 8 (UBXD8) regulate ERMCS. The p97-UBXD8 complex localizes to contacts and its loss increases contacts in a manner that is dependent on p97 catalytic activity. Quantitative proteomics and lipidomics of ERMCS demonstrates alterations in proteins regulating lipid metabolism and a significant change in membrane lipid saturation upon UBXD8 deletion. Loss of p97-UBXD8 increased membrane lipid saturation via SREBP1 and the lipid desaturase SCD1. Aberrant contacts can be rescued by unsaturated fatty acids or overexpression of SCD1. We find that the SREBP1-SCD1 pathway is negatively impacted in the brains of mice with p97 mutations that cause neurodegeneration. We propose that contacts are exquisitely sensitive to alterations to membrane lipid composition and saturation.