The yeast alcohol acetyl transferase I, Atf1p, is responsible for the major part of volatile acetate ester production in fermenting Saccharomyces cerevisiae cells. Some of these esters, such as ethyl acetate and isoamyl acetate, are important for the fruity flavours of wine, beer and other fermented beverages. In order to reveal the subcellular localization of Atf1p and further unravel the possible physiological role of this protein, ATF1::GFP fusion constructs were overexpressed in brewer's yeast. The transformant strain showed a significant increase in acetate ester formation, similar to that of an ATF1 overexpression strain, indicating that the Atf1p-GFP fusion protein was active. UV fluorescence microscopy revealed that the fusion protein was localized in small, sphere-like organelles. These organelles could be selectively stained by the fluorescent dye Nile red, indicating that they contained high amounts of neutral lipids and/or sterols, a specific characteristic of yeast lipid particles. Purification of lipid particles from wild type and ATF1 deletion cells confirmed that the Atf1p-GFP fusion protein was located in these organelles. Furthermore, a clear alcohol acetyl transferase activity could be measured in the purified lipid particles of both wild type and transformed cells. The localization of Atf1p in lipid particles may indicate that Atf1p has a specific role in the lipid and/or sterol metabolism that takes place in these particles. Copyright (C) 2004 John Wiley Sons, Ltd.