Heme is a key molecule in mediating the effects of oxygen on various molecular and cellular processes in many living organisms. In the yeast Saccharomyces cerevisiae, heme serves as a secondary signal for oxygen; intracellular heme synthesis directly correlates with oxygen tension in the environment. In yeast, oxygen sensing and heme signaling are primarily mediated by the heme activator protein Hap1, which, in response to heme, activates the transcription of genes required for respiration and for controlling oxidative damage. Heme regulation of many genes required for anaerobic growth is mediated by the aerobic repressor Rox1, whose expression is controlled by heme. In this review, we summarize recent knowledge about (i) how heme synthesis may be controlled by oxygen tension, (ii) how heme precisely and stringently controls Hap1 activity and (iii) whether other transcriptional activators can also mediate heme action.