This article reviews our knowledge of the ethanol utilization pathway (alc system) in the hyphal fungus Aspergillus nidulans. We discuss the progress made over the past decade in elucidating the two regulatory circuits controlling ethanol catabolism at the level of transcription, specific induction, and carbon catabolite repression, and show how their interplay modulates the utilization of nutrient carbon sources. The mechanisms featuring in this regulation are presented and their modes of action are discussed: First, AlcR, the transcriptional activator, which demonstrates quite remarkable structural features and an original mode of action; second, the physiological inducer acetaldehyde, whose intracellular accumulation induces the alc genes and thereby a catabolic flux while avoiding intoxification; third, CreA, the transcriptional repressor mediating carbon catabolite repression in A. nidulans, which acts in different ways on the various alc genes; Fourth, the promoters of the structural genes for alcohol dehydrogenase (alcA) and aldehyde dehydrogenase (aldA) and the regulatory alcR gene, which exhibit exceptional strength compared to other genes of the respective classes. alc gene expression depends on the number and localization of regulatory cis-acting elements and on the particular interaction between the two regulator proteins, AlcR and CreA, binding to them. All these characteristics make the ethanol regulon a suitable system for induced expression of heterologous protein in filamentous fungi.