There is a need for development of sustainable production processes for production of fats/oils and lipid derived chemicals. The dimorphic oleaginous yeast Yarrowia lipolytica is a promising organism for conversion of biomass hydrolysate to lipids, but in many such processes hyphae formation will be problematic. We have therefore constructed and compared the performance of strains carrying deletions in several published gene targets suggested to abolish hyphae formation (MHY1, HOY1 and CLA4). The MHY1-deletion was the only of the tested strains which did not exhibit hyphae formation under any of the conditions tested. The MHY1-deletion also had a weak positive effect on lipid accumulation without affecting the total fatty acid composition, irrespective of the nitrogen source used. MHY1 has been suggested to constitute a functional homolog of the stress responsive transcription factors MSN2/4 in Saccharomyces cerevisiae, the deletion of which are highly stress sensitive. However, the deletion of MHY1 displayed only minor difference on survival of a range of acute or long term stress and starvation conditions. We conclude that the deletion of MHY1 in Y.lipolytica is a reliable way of abolishing hyphae formation with few detectable negative side effects regarding growth, stress tolerance and lipid accumulation and composition.