Abstract: The Saccharomyces cerevisiae NTE1 gene encodes an evolutionarily conserved phospholipase B localized to the endoplasmic reticulum (ER) that degrades phosphatidylcholine (PC) generating glycerophosphocholine and free fatty acids. We show here that the activity of NTE1-encoded phospholipase B (Nte1p) prevents the attenuation of transcription of genes encoding enzymes involved in phospholipid synthesis in response to increased rates of PC synthesis by affecting the nuclear localization of the transcriptional repressor Opi1p. Nte1p activity becomes necessary for cells growing in inositol free media under conditions of high rates of PC synthesis elicited by the presence of choline at 37 degrees C. The specific choline transporter encoded by the HNM1 gene is necessary for the burst of PC synthesis observed at 37 degrees C as (i) Nte1p is dispensable in a hnm1Delta strain under these conditions and (ii) there is a 3-fold in the rate of choline transport via the Hnm1p choline transporter upon shift to 37 degrees C. Overexpression of NTE1 alleviated the inositol auxotrophy of a plethora of mutants including scs2Delta, scs3Delta, ire1Delta and hac1Delta among others. Overexpression of NTE1 sustained phospholipid synthesis gene transcription under conditions that normally repress transcription. This effect was also observed in a strain defective in the activation of free fatty acids for phosphatidic acid (PA) synthesis. No changes in the levels of PA were detected under conditions of altered expression of NTE1. Consistent with a synthetic impairment between challenged ER function and inositol deprivation, increased expression of NTE1 improved the growth of cells exposed to tunicamycin in the absence of inositol. We describe a new role for Nte1p towards membrane homeostasis regulating phospholipid synthesis gene transcription. We propose that Nte1p activity, by controlling PC abundance at the ER, affects lateral membrane packing and that this parameter, in turn, impacts on the repressing transcriptional activity of Opi1p, the main regulator of phospholipid synthesis gene transcription.