The Saccharomyces cerevisiae MGA2 gene encodes an important regulator of unsaturated fatty acid production, by controlling transcription and mRNA stability of OLE1, the gene encoding the Delta 9 fatty acid desaturase. Lipid composition studies indicated that the mga2 Delta strain contains elevated relative amounts of squalene when compared to wild-type cells. The deletion of the MGA2 homologue SPT23 did not impact squalene levels. To explore the role of MGA2 in the regulation of sterol synthesis, the transcription of the ERG1 gene, which encodes squalene epoxidase, was studied using an ERG1 promoter-lacZ reporter gene construct. We report here that in addition to MGA2's role in regulation of unsaturated fatty acids, MGA2 is required for full basal expression of ERG1. Mga2p was found to be controlled by a novel regulator in its activation of ERG1, as neither unsaturated fatty acids nor cobalt affected ERG1 expression, as had previously been shown for Mga2p's regulation of OLE1. Further, response to miconazole treatment, which inhibits production of ergosterol at a later step in the sterol biosynthetic pathway and results in up-regulation of several genes in ergosterol synthesis, was not affected in the mga2 Delta mutant. In each case, the spr23 Delta mutant strain shows similar ERG1 expression to wild-type cells, while the mga2 Delta/spt23 Delta strain shows reduced ERG1 expression, comparable to the mga2 Delta, suggesting that the role of regulation of ERG1 transcription is unique to Mga2p. (C) 2010 Elsevier Inc. All rights reserved.