By functional complementation of the auxotrophic requirements for choline of a cdgl, cho2 doublemutant, by transformation with a genomic DNA library in a high copy number plasmid, two different types of complementing DNA inserts were identified. One type of insert was earlier shown to represent the CH02 structural gene. In this report we describe the molecular and biochemical characterization of the second type of complementing activity. The transcript encoded by the cloned gene was about 1000-nt in length and was regulated in response to the soluble phospholipid precursors, inositol and choline. A gene disruption resulted in no obvious growth phenotype at 23 ~ or 30 ~ but in a lack of growth at 37 ~ in the presence of monomethylethanolamine. Null-mutants exhibited an inositol-secretion phenotype, indicative of mutations in the lipid biosynthetic pathway. Complementation analysis, biochemical analysis of the phospholipid methylation pathway in vivo, and comparison of the restriction pattern of the cloned gene to published sequences, unequivocally identified the cloned gene as the OPI3 gene, encoding phospholipid-N-methyltransferase in yeast. When present in multiple copies the OPI3 gene efficiently suppresses the phospholipid methylation defect of a cho2 mutation. As a result of impaired synthesis of phosphatidylcholine, the INOl-deregulation phenotype is abolished in cho2 mutants transformed with the OPI3 gene on a high copy number plasmid. Taken together, these data demonstrate a significantly overlapping specificity of the OPI3 gene product for three sequential phospholipid methylation reactions in the de novo Ptd-Cho biosynthetic pathway.