The human pathogen Candida albicans is responsible for a large proportion of infections in immunocompromised individuals, and the emergence of drug-resistant strains is of medical concern. Resistance to antifungal azole compounds is often due to an increase in drug efflux or an alteration of the pathway for synthesis of ergosterol, an important plasma membrane component in fungi. However, little is known about the transcription factors that mediate drug resistance. In Saccharomyces cerevisiae, two highly related transcriptional activators, Upc2p and Ecm22p, positively regulate the expression of genes involved in ergosterol synthesis (ERG genes). We have identified a homologue in C. albicans of the S. cerevisiae UPC2/ECM22 genes and named it UPC2. Deletion of this gene impaired growth under anaerobic conditions and rendered cells highly susceptible to the antifungal drugs ketoconazole and fluconazole. Conversely, overexpression of Upc2p increased resistance to ketoconazole, fluconazole, and fluphenazine. Azole-induced expression of the ERG genes was abolished in a Delta upc2 strain, while basal levels of these mRNAs remained unchanged. Importantly, the purified DNA binding domain of Upc2p bound in vitro to putative sterol response elements in the ERG2 promoter, suggesting that Upc2p increases the expression of the ERG genes by directly binding to their promoters. These results provide an important link between changes in the ergosterol biosynthetic pathway and azole resistance in this opportunistic fungal species.