A potent ability to assimilate hydrophobic compounds, including n-alkanes and fatty acids as carbon sources, is one of important characteristics of the yeast Yarrowia lipolytica, and has been studied for both basic microbiological interest and biotechnological applications. This review summarizes recent progress on the metabolism of n-alkanes and its transcriptional control in response to n-alkanes and to fatty acids in Y. lipolytica. In the metabolism of n-alkanes, cytochromes P450ALK catalyze their initial hydroxylation to fatty alcohols, which are subsequently converted to fatty acids and utilized. The transcription of ALK1, encoding a predominant cytochrome P450ALK, is regulated in response to n-alkanes by two basic helix-loop-helix transcription activators, Yas1p and Yas2p, and Opi1-family transcription repressor Yas3p. Transcription of the genes involved in fatty acid utilization and peroxisome biogenesis is controlled by Ctf1-family Zn2Cys6 type transcription factor Por1p in response to fatty acids in Y. lipolytica.