The enzyme 3-hydroxy-3-methylglutaryl-coenzyme-A (HMG-CoA) reductase is known as the rate-limiting enzyme in early sterol biosynthesis in eukaryotic cells. To eliminate this regulation in the yeast Saccharomyces cerevisiae, a truncated HMG1 gene, producing a form of the enzyme that lacks the membrane-binding region (i.e. amino acids 1-552), was constructed and overexpressed in this yeast. The transformed strains accumulated large amounts of the sterol precursor squalene, while the levels of ergosterol and a number of other sterol compounds were only slightly elevated. These findings suggest that HMG-CoA reductase is not the only rate-limiting step in sterol synthesis and its overexpression cannot significantly influence this pathway beyond the sterol precursor squalene.