The major human fungal pathogen, Candida albicans, colonizes different body sites, differing greatly in oxygen levels. Using whole-genome DNA microarrays, we analysed the transcriptomal response of C. albicans to hypoxia. In this condition, transcripts of genes involved in fermentative metabolism, including glycolytic genes, as well as hypha-specific genes, were up-regulated; in contrast, genes regulating oxidative metabolism were down-regulated. Although the morphogenetic and metabolic regulator Efg1p regulates these genes during normoxia, we found that Efg1p is not involved in their hypoxic regulation. Instead, Efg1p was specifically required for hypoxic expression or repression of subsets of genes. One class of hypoxia-regulated genes, encoding proteins involved in fatty acid biosynthesis, was dependent on Efg1p for maximal hypoxic expression, requiring Efg1p for transcriptional activation. During hypoxia, efg1 mutants contained lower levels of unsaturated fatty acids, while hyphal morphogenesis on solid media was significantly increased at temperatures <37 degrees C. These results suggest that during oxygen-limitation, Efg1p acts as a repressor of filamentation and as a positive regulator of fatty acid desaturation. We discuss that C. albicans responds to hypoxia largely by different mechanisms compared to budding yeast and that hypoxic adaptation requiring Efg1p is crucial for successful infection of human cells and tissues.