The polyhydroxybutyrate (PHB) synthase gene of the bacterium Alcaligenes eutrophus was used to construct a yeast plasmid which enabled expression of the functional synthase enzyme in Saccharomyces cerevisiae. Cells transformed with the synthase plasmid accumulated up to 0.5% of cell dry weight as PHB, with accumulation occurring in the stationary phase of batch growth. The identity of PHB in recombinant yeast cells was confirmed with 1H-NMR spectra of chloroform-extracted cell material. In addition, freeze-fracture electron microscopy revealed cytoplasmic granules exhibiting plastic deformations characteristic for PHB. GC results indicated a low background level of PHB in the wild-type strain, but intact polymer could not be detected by 1H-NMR. Formation of PHB in the recombinant strain implies the participation of native yeast enzymes in the synthesis of D-3-hydroxybutyryl-CoA (3-HB-CoA). Inhibition studies with cerulenin indicated that the fatty acid synthesis pathway is not involved in PHB precursor formation. Wild-type cell-free extracts showed D-3-HB-CoA dehydrogenase activity [150-200 nmol min-1 (mg protein)-1] and acetoacetyl-CoA thiolase activity [10-20 nmol min-1 (mg protein)-1], which together could synthesize monomer from acetyl-CoA. PHB accumulation was simultaneous with ethanol production, suggesting that PHB can act as an alternate electron sink in fermentative metabolism. We propose that PHB synthesis in recombinant yeast is catalysed by native cytoplasmic acetoacetyl-CoA thiolase, a native beta-oxidation protein possessing D-3-HB-CoA dehydrogenase activity and heterologous PHB synthase.