Rhodosporidium toruloides protoplasts could be transformed, in the presence of polyethylene glycol (PEG), at frequencies of approx. 1 X 10(3) transformants/micrograms of DNA. The plasmid used, pHG2, which contains the phenylalanine ammonia-lyase (PAL)-coding gene (PAL) of R. toruloides, could replicate as an unstable plasmid in the yeast, or could integrate at the PAL locus to give stable transformants. Plasmids that function in R. toruloides were constructed using either the PAL gene or LEU2 gene of Saccharomyces cerevisiae as dominant selectable markers. R. toruloides transformed with pHG8, which contains both genes, coinherited the two markers. It is also shown that the 2mu replicon of S. cerevisiae does not function in R. toruloides; neither is the PAL gene expressed in S. cerevisiae.