We have cloned and characterized a homologue of the previously isolated GPD1 gene, encoding sn-glycerol 3-phosphate dehydrogenase (NAD+) in Saccharomyces cerevisiae. This second gene, called GPD2, encodes a protein of 384 amino acids that shares 69% sequence identity with GPD1. Like GPD1 it has an amino-terminal extension of unknown function. GPD2 is located on chromosome VII and cross-hybridizes with GPD1 at chromosome IV as well as with an unknown homologue at chromosome XV. Disruption of the GPD2 gene did not reveal any observable phenotypic effects, whereas overexpression resulted in a slight, but significant, increase of GPD enzyme activity in wild-type cells. Analysis of gene transcription by a CAT-reporter gene fused to the GPD promoters revealed decreased transcriptional activity of the GPD2 promoter in cells grown on non-fermentable as opposed to fermentable carbon sources, and no induction in cells exposed to high osmolarity or heat shock. Similar analysis of GPD1 demonstrated an 8–17-fold higher basal level of transcription compared to GPD2. Furthermore, such analysis revealed that the GPD1 promoter was it induced by increased osmolarity essentially independent of the type of stress solute used, the level of GPD1 transcription being increased about sevenfold in cells growing at 1.4M NaCl.