We have determined the sequence of the FAS3/ACC regulatory region and mapped the transcription initiation site. In this sequence, there are two putative UASINO sequences. Deletion and mutation analyses revealed that the UASINO sequence at nucleotides -719 to -710 is functional. The expression of FAS3-lacZ reporter genes and the measurement of mRNA levels in regulatory mutants of phospholipid biosynthesis clearly indicated that FAS3 is regulated by inositol and choline. Previous studies have shown that the genes coding for fatty acid synthase, FAS1 and FAS2, are regulated by inositol (Chirala, S.S.  Proc. Natl. Acad. Sci. USA 89, 10232-10236). Thus all three genes involved in saturated fatty acid biosynthesis are coordinately regulated with phospholipid biosynthesis. Comparison of the UASINO sequences present in FAS1, FAS2, and FAS3 suggested that the functional sequence of this UAS element is YTTCACATG. However, even when the functional UASINO was mutated, substantial expression of the FAS3-lacZ reporter gene was observed. Deletion analysis, electrophoretic mobility shift assays, and expression using a heterologous reporter gene showed that the region between nucleotides -840 and -736 has two UAS elements. The same sequence seems to be responsible for fatty acid-mediated repression of FAS3. The presence of these additional UAS sequences explains why yeast does not require fatty acids even when repressing amounts of inositol and choline are present in the medium.