Membrane preparations from Saccharomyces cerevisiae catalyze the transfer of phosphoethanolamine and phosphocholine from the cytidine dinucleotide derivatives to endogenous and exogenous 1,2-diacylglycerols. Utilizing CDP-[14C]ethanolamine and CDP-[14C]choline as isotopic substrates, diacylglycerol ethanolaminephosphotransferase (EPT) and diacylglycerol cholinephosphotransferase (CPT) have been characterized in vitro. Both enzymes (i) require Mn2+; (ii) are stimulated by exogenous 1,2-diacylglycerols; and (iii) are inhibited by p-hydroxymercuribenzoate and CMP. Yeast EPT and CPT can be clearly distinguished on the basis of their different (i) pH optima; (ii) thermal sensitivities at 50 degrees C; (iii) concentration-dependent inhibition by CMP; and (iv) sensitivities to the hypolipidemic drug, DH-990. Reversibility experiments demonstrate that CDP-ethanolamine can be resynthesized by enzymatic reactions involving CMP and phosphatidylethanolamine (PE) formed from the cytidine dinucleotide derivative or by the decarboxylation of phosphatidylserine (PS). Similarly, CDP-choline can be reformed by the reaction of CMP with PC synthesized from CDP-choline or by the sequential N-methylation of PE. A double-isotope experiment provides evidence that PE molecules synthesized via CDP-ethanolamine or by the decarboxylation of PS are converted to phosphatidylcholine (PC) by the methylation pathway at similar, if not identical, rates. The N-methylation of the metabolically specific pool of PE, synthesized from CDP-ethanolamine, is drastically reduced in membranes prepared from choline-grown cells. Neither EPT nor CPT appear to be induced by the addition of ethanolamine or choline, respectively, to the growth medium. However, the addition of 10 mM choline to the growth medium results in a 46% reduction in EPT activity. This change in EPT activity may be a regulatory response to lower rates of PE N-methylation in choline-grown cells.