Retrograde genes of Saccharomyces cerevisiae encode the enzymes needed to synthesize alpha-ketoglutarate, required for ammonia assimilation, when mitochondria are damaged or non-functional because of glucose fermentation. Therefore, it is not surprising that a close association exists between control of the retrograde regulon and expression of nitrogen catabolic genes. Expression of these latter genes is nitrogen catabolite repression (NCR)-sensitive, i.e. expression is low with good nitrogen sources (e.g. glutamine) and high when only poor (e.g. proline) or limiting nitrogen sources are available. It has been reported recently that both NCR-sensitive and retrograde gene expression is negatively regulated by glutamine and induced by treating cells with the Tor1/2 inhibitor, rapamycin. These conclusions predict that NCR-sensitive and retrograde gene expression should respond in parallel to nitrogen sources, ranging from those that highly repress NCR-sensitive transcription to those that elicit minimal NCR. Because this prediction did not accommodate earlier observations that CIT2 (a retrograde gene) expression is higher in glutamine than proline containing medium, we investigated retrograde regulation further. We show that (i) retrograde gene expression correlates with intracellular ammonia and alpha-ketoglutarate generated by a nitrogen source rather than the severity of NCR it elicits, and (ii) in addition to its known regulation by NCR, NAD-glutamate dehydrogenase (GDH2) gene expression is down-regulated by ammonia under conditions where NCR is minimal. Therefore, intracellular ammonia plays a pivotal dual role, regulating the interface of nitrogen and carbon metabolism at the level of ammonia assimilation and production. Our results also indicate the effects of rapamycin treatment on CIT2 transcription, and hence Tor1/2 regulation of retrograde gene expression occur indirectly as a consequence of alterations in ammonia and glutamate metabolism.