Candida lipolytica is a rather common yeast isolated more frequently from substrates containing lipids or proteins, such as dairy products, than from substrates rich in sugars. This species assimilates hydrocarbons and is currently being studied for its potential to convert petroleum into yeast cells for use in feeds and foods. We have found C. lipolytica to exist in nature primarily in the heterothallic haploid state. When appropriate strains of opposite sex are mixed on a suitable sporulation medium, conjugation occurs followed by the production of ascospores. Since heterothallism permits laboratory control of hybridization, this characteristic of C. lipolytica enhances the possibility of im proving its strains for technological uses.