The structure gene encoding CDPdiacylglycerol-inositol 3-phosphatidyltransferase was isolated by complementation in a Saccharomyces cerevisiae mutant after transformation with a comprehensive gene library containing Sau3AI partial restriction fragments of wild-type yeast DNA inserted into the YEp13 shuttle vector. Introduction of the cloned plasmid into the mutant restored both growth of cells and CDPdiacylglycerol-inositol 3-phosphatidyltransferase activity. A subcloning study indicated that the complementing gene was contained within a 1700-base-pair fragment of DNA. Expression of the cloned sequence was independent of its orientation in the vector. CDPdiacylglycerol-inositol 3-phosphatidyltransferase activity in the transformant was eight fold higher than that in the wild-type strain. Although the mutant enzyme had a greatly increased Km for myo-inositol, the enzyme in the transformant had an apparent Km for myo-inositol equal to that of the wild-type enzyme, indicating the presence of the wild-type structure gene on the recombinant plasmid. The elevated level of enzyme activity in the transformant did not lead to an increase in the content of phosphatidylinositol. In contrast, supplementation of the culture medium with increasing concentrations of myo-inositol resulted in an increase in the phosphatidylinositol content. Thus, the availability of myo-inositol is a critical regulatory factor in yeast phosphatidylinositol synthesis.