The yeast Saccharomyces cerevisiae responds to osmotic stress, i.e., an increase in osmolarity of the growth medium, by enhanced production and intracellular accumulation of glycerol as a compatible solute. We have cloned a gene encoding the key enzyme of glycerol synthesis, the NADH-dependent cytosolic glycerol-3-phosphate dehydrogenase, and we named it GPD1. gpd1 delta mutants produced very little glycerol, and they were sensitive to osmotic stress. Thus, glycerol production is indeed essential for the growth of yeast cells during reduced water availability. hog1 delta mutants lacking a protein kinase involved in osmostress-induced signal transduction (the high-osmolarity glycerol response [HOG] pathway) failed to increase glycerol-3-phosphate dehydrogenase activity and mRNA levels when osmotic stress was imposed. Thus, expression of GPD1 is regulated through the HOG pathway. However, there may be Hog1-independent mechanisms mediating osmostress-induced glycerol accumulation, since a hog1 delta strain could still enhance its glycerol content, although less than the wild type. hog1 delta mutants are more sensitive to osmotic stress than isogenic gpd1 delta strains, and gpd1 delta hog1 delta double mutants are even more sensitive than either single mutant. Thus, the HOG pathway most probably has additional targets in the mechanism of adaptation to hypertonic medium.