The reaction catalyzed by squalene synthase (EC.2.5.1.21) that converts two molecules of farnesyl pyrophosphate to squalene represents a crucial branch point of the isoprenoid pathway in diverting carbon flux towards the biosynthesis of sterols. In the present study two soybean squalene synthase genes, GmSQS1 and GmSQS2, were identified in the soybean genome and functionally characterized for their roles in sterol biosynthesis. Both genes encode a deduced protein of 413 amino acids. Complementation assays showed that the two genes were able to convert yeast sterol auxotrophy erg9 mutant to sterol prototrophy. Expression of GmSQS1 and GmSQS2 was ubiquitous in roots, stem, leaves, flower and young seeds of soybean, however GmSQS1 transcript was preferential in roots while GmSQS2 transcript was more in leaves. Their expression was lower in response to dehydration treatments suggesting they might be negative regulators of water stress adaptation. Transgenic Arabidopsis plants overexpressing GmSQS1 driven by either constitutive or seed-specific promoters showed increases in the major end product sterols: campesterol, sitosterol and stigmasterol, which resulted in up to 50% increase in total sterol content in the seeds. The increase in the end product sterols by GmSQS1 overexpression was at the level achievable by previously reported overexpression of individual or combination of other key enzymes in the sterol pathway. Together the data demonstrate that soybean SQS genes play an important role in diverting carbon flux to the biosynthesis of the end product sterols in the seeds.