Communication between the mitochondria and the nucleus is essential to ensure correct metabolic coordination of the cell. Signaling pathways leading from the mitochondria to the nucleus are referred to as retrograde signaling and were first discovered in the yeast Saccharomyces cerevisiae. Cells that lack their mitochondrial genome (rho0 cells) trigger expression of the nuclear CIT2 gene in order to ensure adequate amino acid biosynthesis. More recently, it has been found that a different set of genes involved in multidrug resistance in S. cerevisiae is strongly induced in rho0 cells. During a search for negative regulators of the ATP-binding cassette (ABC) transporter-encoding gene PDR5, it was observed that rho0 mutants exhibited dramatic up-regulation of the transcript of this gene. This induction was due to the post-translational activation of a direct upstream regulator of PDR5 that was designated Pdr3p. Loss of the LGE1 gene led to a block in rho0-mediated induction of PDR5 expression. Lge1p has been observed by others to be involved in histone H2B ubiquitination along with the ubiquitin-conjugating enzyme Rad6p and the ubiquitin ligase Bre1p. Our studies provide evidence that Lge1p has another function unique from H2B ubiquitination that is required for retrograde regulation of PDR5 transcription. We have also found that the Pdr pathway regulates expression of several genes involved in sphingolipid biosynthesis. These findings suggest that the physiological role of the PDR genes might be to regulate membrane homeostasis and rho0-triggered changes in this parameter may be the signal controlling PDR gene expression.