Carotenoid biosynthesis is regulated by blue light during growth of Neurospora crassa mycelia. We have cloned the al-1 gene of N. crassa encoding the carotenoid-biosynthetic enzyme phytoene dehydrogenase and present an analysis of its structure and regulation. The gene encodes a 595-residue polypeptide that shows homology to two procaryotic carotenoid dehydrogenases. RNA measurements showed that the level of al-1 mRNA increased over 70-fold in photoinduced mycelia. Transcription run-on studies indicated that the al-1 gene was regulated at the level of initiation of transcription in response to photoinduction. The photoinduced increase of al-1 mRNA levels was not observed in two Neurospora mutants defective in all physiological photoresponses. Analysis of cosmid containing al-1 and of a translocation strain with a breakpoint within al-1 indicated that al-1 transcription proceeds towards the centromere of linkage group I of N. crassa.