The development of crop plants with increased salt tolerance necessitates the study of naturally salt-tolerant eukaryotic species. We studied the bio-synthesis of glycerol as a compatible solute in the halophilic eukaryotic microorganism, black yeast Hortaea werneckii. A restriction fragment-differential display technique was used to investigate the transcriptome of the organism. Eight differentially expressed genes were identified in response to growth at different salinities. Although the putative functions of their products, P-type ATPase, ubiquinone reductase, aconitase, RNA helicase, Asn-tRNA ligase, isoamyl alcohol oxidase, and phosphatidylinositol-3-kinase, are not intimately related within the cellular machinery, the results presented here are sufficient to propose a model which describes how H. werneckii adapts to extremely high salinities. Some of these mechanisms of adaptation to raised environmental salinity are similar to those in other salt-sensitive species, e.g. glycerol accumulation, there also appear to be novel mechanisms present such as the use of different energy production mechanisms and post-transcriptional regulation of gene expression. Our results have also provided new data on two genes from two other fungal species, the Neurospora crassa B1D1.130 gene and the Aspergillus ustus amdS-A gene.