Multiple or pleiotropic drug resistance often occurs in the yeast Saccharomyces cerevisiae through genetic activation of the Cys(6)-Zn(II) transcription factors Pdr1p and Pdr3p. Hyperactive alleles of these proteins cause overproduction of target genes that include drug efflux pumps, which in turn confer high level drug resistance. Here we provide evidence that both Pdr1p and Pdr3p act to regulate production of an enzyme involved in sphingolipid biosynthesis in S. cerevisiae. The last step in formation of the major sphingolipid in the yeast plasma membrane, mannosyldiinositol phosphorylceramide, is catalyzed by the product of the IPT1 gene, inositol phosphotransferase (Ipt1p). Transcription of the IPT1 gene is responsive to changes in activity of Pdr1p and Pdr3p. A single Pdr1p/Pdr3p response element is present in the IPT1 promoter and is required for regulation by these factors. Loss of IPT1 has complex effects on drug resistance of the resulting strain, consistent with an important role for mannosyldiinositol phosphorylceramide in normal plasma membrane function. Direct assay for lipid contents of cells demonstrates that changes in sphingolipid composition correlate with changes in the activity of Pdr3p. These data suggest that Pdr1p and Pdr3p may act to modulate the lipid composition of membranes in S. cerevisiae through activation of sphingolipid biosynthesis along with other target genes.