In the yeast Saccharomyces cerevisiae, the synthesis of phospholipids in the exponential phase of growth occurs at the expense of the storage lipid triacylglycerol. As exponential phase cells progress into the stationary phase, the synthesis of triacylglycerol occurs at the expense of phospholipids. Early work indicates a role of the phosphatidate phosphatase (PAP) in this metabolism; the enzyme produces the diacylglycerol needed for the synthesis of triacylglycerol and simultaneously controls the level of phosphatidate for the synthesis of phospholipids. Four genes (APP1, DPP1, LPP1, and PAH1) encode PAP activity in yeast, and it has been unclear which gene is responsible for the synthesis of triacylglycerol throughout growth. An analysis of lipid synthesis and composition, as well as PAP activity in various PAP mutant strains, showed the essential role of PAH1 in triacylglycerol synthesis throughout growth. Pah1p is a phosphorylated enzyme whose in vivo function is dependent on its dephosphorylation by the Nem1p-Spo7p protein phosphatase complex. nem1Δ mutant cells exhibited defects in triacylglycerol synthesis and lipid metabolism that mirrored those imparted by the pah1Δ mutation, substantiating the importance of Pah1p dephosphorylation throughout growth. An analysis of cells bearing PPAH1-lacZ and PPAH1-DPP1 reporter genes showed that PAH1 expression was induced throughout growth and that the induction in the stationary phase was stimulated by inositol supplementation. A mutant analysis indicated that the Ino2p/Ino4p/Opi1p regulatory circuit and transcription factors Gis1p and Rph1p mediated this regulation.