We have sequenced the structural gene and flanking regions for lanosterol 14 alpha-demethylase (14DM) from Saccharomyces cerevisiae. An open reading frame of 530 codons encodes a 60.7-kDa protein. When this gene is disrupted by integrative transformation, the resulting strain requires ergosterol and, as expected, grows only in the absence of oxygen. The deduced amino acid sequence of 14DM includes a hydrophobic segment near the amino terminus which may be a transmembrane domain. The deduced sequence has been compared with those of eight other eukaryotic P450s, each from a different family within the P450 superfamily. These comparisons indicate that this yeast gene is the first member of a new P450 family, P450LI. The P450, designated P450LIA1, is more closely related to mammalian P450s than to the bacterial P450cam. In fact, both the yeast P450 and several mammalian P450s have equivalent alignment scores when each is compared with the bovine P450scc. Matrix comparisons of the amino acid sequence of this P450 with those of mammalian P450s reveal three conserved regions. The DNA region 5' to the structural 14DM gene includes poly(dA:dT) sequences and a repeating hexamer sequence.