Intracellular glycerol accumulation is critical for Candida albicans to maintain osmolarity, and therefore defects in glycerol homeostasis can have severe effects on the morphogenetic plasticity and pathogenicity of this fungus. The final step of glycerol synthesis involves the dephosphorylation of glycerol 3-phosphate by glycerol 3-phosphatase (GPP1). We have identified a single copy of the GPP orthologous gene (GPP1) in the C. albicans haploid genome, as well as the paralogous gene 2-deoxyglucose-6-phosphate phosphatase (DOG1); both belong to a family of low molecular weight phosphatases. A knockout of the GPP1 gene in C. albicans caused increased susceptibility to high salt concentrations, indicating a deficiency in osmoregulation. Reintroduction of the GPP1 gene complemented the impairment of salt-tolerance in the gpp1/gpp1 mutant. Northern blot analysis showed that the GPP1 gene was strongly responsive to osmotic stress, and its transcriptional expression was positively correlated with intracellular glycerol accumulation. These results demonstrate that the GPP1 gene plays an important role in the osmoregulation in C. albicans.