In examining the production of valuable compounds by marine microorganisms, we isolated a novel yeast strain that produces a large amount of squalene and several polyunsaturated fatty acids. Molecular and phylogenetic analyses of the ribosomal DNA suggest that the isolate belongs to the genus Pseudozyma, which comprises ustilaginomycetous anamorphic yeasts. The nucleotide sequence of an internally transcribed spacer region from isolate Pseudozyma sp. JCC207 showed 98% similarity with those of Pseudozyma rugulosa and Pseudozyma aphidis, which are close relatives of the isolate. In considering use of Pseudozyma sp. JCC207 for squalene production, the efficiency of squalene production was investigated under different conditions. Glucose was the best carbon source for the production of squalene. In the presence of yeast extract, squalene production was activated and an optimum ratio of glucose to yeast extract was 4.5. For the optimal squalene production, the concentration of glucose was 40 g l(-1) and the best nitrogen source was sodium nitrogen. Pseudozyma sp. JCC207 was shown to produce up to 5.20 g/L of biomass and 340.52 mg/L of squalene. In an optimal condition, the content and yield of squalene produced by Pseudozyma sp. JCC207 were much greater than those obtained from microorganisms previously reported as squalene producers. We identified, classified, and characterized Pseudozyma sp. JCC207 as a novel squalene producer. The squalene production rate of Pseudozyma sp. JCC207 makes it an ideal candidate for the commercialization of microbial squalene.