The DAN1 gene is expressed under anaerobic conditions in yeast and completely repressed during aerobic growth. The function of the gene is unknown, and genetic disruption had no effect on fitness which could be detected, even upon prolonged anaerobic growth. Expression of DAN1 was constitutive in a heme-deficient strain, indicating that heme participates in repression. Expression was blocked by heme in anaerobic medium, suggesting that heme acts as a negative co-effector rather than through its metabolic functions, i.e., in the production of a co-effector. Expression of DAN1 was regulated in parallel with the hypoxic gene ANB1, showing identical kinetics of induction and dose response to heme. However, unlike ANB1, DAN1 is not regulated by the repressor of the hypoxic regulon, ROX1, as shown by observation of normal aerobic repression of DAN1 in a strain carrying a deletion of ROX1. These results indicate the existence of a parallel regulatory system which produces an identical response to oxygen by a different mechanism than that controlling the hypoxic regulon.