We have isolated a 1.2-kilobase pair cDNA fragment in a screening for yeast genes regulated at the level of transcription by soluble lipid precursors, inositol and choline. Sequence analysis and comparison of the deduced amino acid sequence to protein databases unveiled 68% similarity of a 374-amino acid peptide fragment to published C termini of chicken and rat acetyl-CoA carboxylase and almost 100% identity to the product of the FAS3 gene from yeast. Several lines of evidence confirm that the cloned gene represents the yeast structural gene ACC1 encoding acetyl-CoA carboxylase. Overexpression of the ACC1 gene from a high copy number plasmid resulted in overexpression of a 250-kDa biotin-enzyme and enzymatic activity of acetyl-CoA carboxylase. Disruption of one ACC1 allele in a diploid wild-type strain resulted in 50% reduction of ACC1-specific mRNA and acetyl-CoA carboxylase specific activity and a marked decrease of biotin associated with a 250-kDa protein, compared to wild-type. After sporulation of diploid disruptants, spores containing the disrupted acc1 allele failed to enter vegetative growth, despite fatty acid supplementation, suggesting that acetyl-CoA carboxylase activity is essential for a process other than de novo fatty acid synthesis and that only a single functional copy of the ACC1 gene exists. ACC1 transcription was repressed 3-fold by lipid precursors, inositol and choline, and was also controlled by regulatory factors Ino2p, Ino4p, and Opi1p, providing evidence that the key step of fatty acid synthesis is regulated in conjunction with phospholipid synthesis at the level of gene expression. The 5'-untranslated region of the ACC1 gene contains a sequence reminiscent of an inositol/choline-responsive element identified in genes encoding phospholipid biosynthetic enzymes.