Transcription of structural genes required for phospholipid biosynthesis in the yeast Saccharomyces cerevisiae is repressed by high concentrations of inositol and choline. The ICRE (inositol/choline-responsive element), which is necessary and sufficient for regulation by phospholipid precursors, functions as a binding site for the heterodimeric Ino2/Ino4 activator. ICRE-dependent transcription becomes constitutive in the absence of the Opil repressor. Opil contains a leucine zipper motif and two glutamine-rich stretches. In this work we describe a molecular analysis of OPI1 function and expression. Opil mutant variants altered at the leucine zipper and a glutamine-rich region, respectively, were no longer functional repressors. In contrast, an Opil deletion variant lacking the N-terminal 106 amino acids still mediated negative regulation. Although the leucine zipper suggests that Opil may act as a DNA-binding protein, our data do not support a direct interaction with the ICRE. Despite its function as an antagonist of INO2 and INO4, expression of OPI1 is stimulated by an upstream ICRE. Overexpression of OPI1 under control of the GAL1 promoter severely inhibited activation of ICRE-dependent genes, leading to inositol-requiring cells. Growth inhibition of GAL1-OPI1 was observed with INO2 and INO4 alleles activated by either the natural promoter or a heterologous control region. Although induction of GAL1-OPI1 strongly repressed ICRE-dependent gene expression, the concentration of the Ino2/Ino4 activator remained unchanged. This finding suggests that differential expression of phospholipid biosynthetic genes may occur even in the presence of a constant amount of the specific activator. Copyright (C) 1999 John Wiley & Sons, Ltd.