The Saccharomyces OLE1 gene encodes the intrinsic membrane-bound Δ-9 fatty acid desaturase. OLE1 expression is regulated at the levels of transcription and mRNA stability by nutrient fatty acids and molecular oxygen. Its transcription is controlled through two distinct promoter elements, the fatty acid response element (FAR) region, and a downstream low-oxygen response element (LORE) that dramatically amplifies FAR-activated expression under hypoxic or cobalt-stimulated growth conditions. Transcription activation through both elements is repressed by unsaturated fatty acids. The half-life of the OLE1 mRNA is also dramatically reduced upon exposure to unsaturated fatty acids. OLE1 expression is governed by two homologous membrane-bound proteins, Spt23p and Mga2p, which activate OLE1 expression through N-terminal polypeptides that are released from the membrane through a ubiquitin-mediated mechanism that involves processing by the 23 S proteosome. Although proteolytic processing of Spt23p can be repressed by polyunsaturated fatty acids, Mga2p processing in normoxic cells appears to be regulated by a different mechanism. Mga2p is essential, however, for the induction of the high levels of expression that are triggered by hypoxia through the LORE promoter element. Surprisingly, Mga2p also plays a critical role in controlling OLE1 mRNA stability, suggesting that there may be a functional linkage between OLE1 transcription and the regulation of OLE1 mRNA stability.