A yeast mutant (LT06) was isolated that showed no growth on iron-limited medium but normal growth on iron-replete medium. A gene cloned from a genomic yeast library complemented the defect, allowing growth on low iron medium. Allelic segregation analysis demonstrated that the cloned gene was the normal allele rather than a high copy suppressor. A disruption mutant was nonviable, indicating that the gene was essential. Sequence analysis and functional assays indicated that the cloned gene was identical to ERG25, a gene that codes for methyl sterol oxidase. Incubation of LT06 in low iron medium resulted in marked changes in lipid metabolism, including the accumulation of fatty acids, triglycerides, methyl sterols, and other sterol precursors. A human homologue of ERG25 was cloned, sequenced, and mapped to human chromosome 4q32-34. Analysis of the data base with both ERG25 and the human homologue resulted in the identification of a putative set of metal binding motifs with similarity to that seen in a family of membrane desaturases-hydroxylases. Western analysis using antibodies to an Erg25-GST fusion protein detected two proteins of 34 and 75 kDa. Both proteins are membrane bound and contain one N-glycosyl unit. Immunofluorescence data suggest that the proteins are present in the endoplasmic reticulum and plasma membrane. Although ERG25 transcripts are not iron regulated, there is a large increase in the concentration of transcript in the mutant LT06 grown in low iron medium. These results suggest that the enzyme is regulated not by iron but by an end product of the ergosterol pathway.