In Saccharomyces cerevisiae, the phosphate signal transduction pathway (PHO pathway) is known to regulate the expression of several phosphate-responsive genes, such as PHO5 and PHO84. However, the fundamental issue of whether cells sense intracellular or extracellular phosphate remains unresolved. To address this issue, we have directly measured intracellular phosphate concentrations by (31)P NMR spectroscopy. We find that PHO5 expression is strongly correlated with the levels of both intracellular orthophosphate and intracellular polyphosphate and that the signaling defect in the Deltapho84 strain is likely to result from insufficient intracellular phosphate caused by a defect in phosphate uptake. Furthermore, the Deltaphm1Deltaphm2, Deltaphm3, and Deltaphm4 strains, which lack intracellular polyphosphate, have higher intracellular orthophosphate levels and lower expression of PHO5 than the wild-type strain. By contrast, the Deltaphm5 strain, which has lower intracellular orthophosphate and higher polyphosphate levels than the wild-type strain, shows repressed expression of PHO5, similar to the wild-type strain. These observations suggest that PHO5 expression is under the regulation of intracellular orthophosphate, although orthophosphate is not the sole signaling molecule. Moreover, the disruption of PHM3, PHM4, or of both PHM1 and PHM2 in the Deltapho84 strain suppresses, although not completely, the PHO5 constitutive phenotype by increasing intracellular orthophosphate, suggesting that Pho84p affects phosphate signaling largely by functioning as a transporter.