MGA2 and SPT23 are functionally and genetically redundant homologs in Saccharomyces cerevisiae. Both genes are implicated in the transcription of a subset of genes, including Ty retrotransposons and Ty-induced mutations. Neither gene is essential for growth, but mga2 spt23 double mutants are inviable. We have isolated a gene-specific activator, SWI5, and the Delta9 fatty acid desaturase of yeast, OLE1, as multicopy suppressors of an mga2Delta spt23 temperature-sensitive mutation (spt23-ts). The level of unsaturated fatty acids decreases 35-40% when the mga2Delta spt23-ts mutant is incubated at 37 degrees. Electron microscopy of these cells reveals a separation of inner and outer nuclear membranes that is sometimes accompanied by vesicle-like projections in the intermembrane space. The products of Ole1p catalysis, oleic acid and palmitoleic acid, suppress mga2Delta spt23-ts and mga2Delta spt23Delta lethality and restore normal nuclear membrane morphology. Furthermore, the level of the OLE1 transcript decreases more than 15-fold in the absence of wild-type Mga2p and Spt23p. Our results suggest that Mga2p/Spt23p control cell viability by stimulating OLE1 transcription.