A Candida glabrata erg1 (Cgerg1) mutant, CgTn201S, was identified by transposon mutagenesis and by increased fluconazole susceptibility. CgERG1 encodes a 489-amino-acid protein which, on the basis of its homology with Saccharomyces cerevisiae ERG1, is a squalene epoxidase essential for ergosterol synthesis. Interruption following codon 475 of CgErg1p decreased the ergosterol content by 50%; caused accumulation of the squalene precursor; increased the levels of susceptibility to fluconazole, itraconazole, and terbinafine; increased the level of resistance to amphotericin B; increased the levels of rhodamine 6G and [(3)H]-fluconazole uptake; reduced the level of growth; and blocked growth under conditions of low oxygen tension. In addition, CgTn201S efficiently took up exogenous cholesterol from cholesterol-containing serum. Cholesterol constituted 34% of the extractable sterols in CgTn201S when it was grown aerobically on serum-containing medium. Under the same conditions, C. albicans contained only 0.1 to 1.2% cholesterol. Exogenous sterols also restored growth under conditions of low oxygen tension. Finally, complementation of the Cgerg1 mutation restored the levels of [(3)H]fluconazole uptake and drug susceptibility to wild-type levels.