We have derived a DNA-mediated transformation system for the yeast Yarrowia lipolytica based on the lithium acetate method Ito et al. (1983) developed for Saccharomyces cerevisiae. The first plasmid used, pLD25, contains the Y. lipolytica LEU2 gene (coding for the enzyme beta-isopropylmalate dehydrogenase, EC 22.214.171.124) on a 6.6 kb piece of DNA inserted into pBR322. The recipient strain ATCC 20688 contains the rarely reverting mutation leu2-35. The Y. lipolytica LEU2 gene complements leuB mutants in Escherichia coli and leu2 mutants in S. cerevisiae and it also hybridizes weakly to the S. cerevisiae LEU2 gene. Y. lipolytica transformation frequencies of up to 104 Leu+ cells per microgram of DNA, per 108 viable cells have been obtained from plasmds linearized with restriction enzymes. The more than 100-fold increase in transformation frequency obtained by using linearized DNA instead of intact plasmid resembles the situation seen in S. cerevisiae for site-directed integrative transformation (Orr-Weaver et al. 1981). The transformants were stable when grown in non-selective medium. We found that pLD25 integrated at the leu2 region when either linear or intact plasmid was used to transform Y. lipolytica. © 1985 Springer-Verlag.