The hydrolysis of ceramides in yeast is catalysed by the alkaline ceramidases Ypc1p and Ydc1p, two highly homologous membrane proteins localized to the ER (endoplasmic reticulum). As observed with many enzymes, Ypc1p can also catalyse the reverse reaction, i.e. condense a non-esterified fatty acid with PHS (phytosphingosine) or DHS (dihydrosphingosine) and thus synthesize ceramides. When incubating microsomes with [(3)H]palmitate and PHS, we not only obtained the ceramide PHS-[(3)H]C(16:0), but also a more hydrophobic compound, which was transformed into PHS-[(3)H]C(16:0) upon mild base treatment. The biosynthesis of a lipid with similar characteristics could also be observed in living cells labelled with [(14)C]serine. Its biosynthesis was dependent on the diacylglycerol acyltransfereases Lro1p and Dga1p, suggesting that it consists of an acylceramide. The synthesis of acylceramide could also be monitored using fluorescent NBD (7-nitrobenz-2-oxa-1,3-diazole)-ceramides as an acceptor substrate for microsomal assays. The Lro1p-dependent transfer of oleic acid on to NBD-ceramide was confirmed by high-resolution Fourier transform and tandem MS. Immunopurified Lro1p was equally able to acylate NBD-ceramide. Lro1p acylates NBD-ceramide by attaching a fatty acid to the hydroxy group on the first carbon atom of the long-chain base. Acylceramides are mobilized when cells are diluted into fresh medium in the presence of cerulenin, an inhibitor of fatty acid biosynthesis.