Nicotinamidase (NAMase) from the budding yeast, Saccharomyces cerevisiae, was purified by Ni(2+) affinity chromatography and gel filtration. N-terminal microsequencing revealed sequence identity with a hypothetical polypeptide encoded by the yeast YGL037C open reading frame sharing 30% sequence identity with Escherichia coli pyrazinamidase/nicotinamidase. A yeast strain in which the NAMase gene, hereafter named PNC1, was deleted shows a decreased intracellular NAD(+) concentration, consistent with the loss of NAMase activity in the null mutant. In wild-type strains, NAMase activity is stimulated during the stationary phase of growth, by various hyperosmotic shocks or by ethanol treatment. Using a P(PNC1)::lacZ gene fusion, we have shown that this stimulation of NAMase activity results from increased levels of the protein and requires stress response elements in the 5'non-coding region of PNC1. These results suggest that NAMase helps yeast cells to adapt to various stress conditions and nutrient depletion, most likely via the activation of NAD-dependent biological processes.