1. A Km mutant of Saccharomyces cerevisiae with a lesion in CDPdiacylglycerol-inositol 3-phosphatidyltransferase was isolated. The mutant required a high concentration of myo-inositol for growth. 2. The CDPdiacylglycerol-inositol 3-phosphatidyltransferase in the mutant cells showed an apparent Km for myo-inositol over 200-times higher than that of the enzyme in wild-type cells. The maximum velocity of the mutant enzyme was comparable to that of the wild-type enzyme. 3. In mutant cells, labelled myo-inositol, phosphate and acetate were incorporated into phosphatidylinositol at much slower rates than in wild-type cells. The phosphatidylinositol content of mutant cells was markedly lower than that observed in wild-type cells. 4. Genetic analysis showed that the growth phenotype of the mutant arose from a single nuclear gene mutation in a gene coding for CDPdiacylglycerol-inositol 3-phosphatidyltransferase. 5. The mutant showed a normal level of phosphatidylserine synthase activity. The phosphatidylserine synthase gene was located between ura3 and hom3 on chromosome V, whereas the CDPdiacylglycerol-inositol 3-phosphatidyltransferase gene showed no linkage with ura3. 6. Labelled acetate was incorporated into various lipids including triacylglycerols, diacylglycerols, sterol esters and phospholipids other than phosphatidylinositol at faster rates in mutant cells than in wild-type cells. Incorporation into both the fatty acid and the sterol moieties was facilitated in the mutant. 7. A striking change in the cell-division process was observed when phosphatidylinositol synthesis was limited. The results showed that phosphatidylinositol synthesis is involved in the cell-division cycle of yeast.