Depletion of exogenous inositol in yeast results in rising levels of phosphatidic acid (PA) and is correlated with increased expression of genes containing the inositol-dependent upstream activating sequence promoter element (UASINO). INO1, encoding myo-inositol 3-phosphate synthase, is the most highly regulated of the inositol-dependent upstream activating sequence–containing genes, but its mechanism of regulation is not clear. In the current study, we determined the relative timing and kinetics of appearance of individual molecular species of PA following removal of exogenous inositol in actively growing wild type, pah1Δ, and ole1ts strains. We report that the pah1Δ strain, lacking the PA phosphatase, exhibits a delay of about 60 min in comparison to wildtype before initiating derepression of INO1 expression. The ole1ts mutant on the other hand, defective in fatty acid desaturation, when grown at a semirestrictive temperature, exhibited reduced synthesis of PA species 34:1 and elevated synthesis of PA species 32:1. Importantly, we found these changes in the fatty acid composition in the PA pool of the ole1ts strain were associated with reduced expression of INO1, indicating that synthesis of PA 34:1 is involved in optimal expression of INO1 in the absence of inositol. Using deuterium-labeled glycerol in short-duration labeling assays, we found that changes associated with PA species 34:1 were uniquely correlated with increased expression of INO1 in all three strains. These data indicate that the signal for activation of INO1 transcription is not necessarily the overall level of PA but rather levels of a specific species of newly synthesized PA 34:1.