The enzyme aldose reductase plays an important role in the osmo-protection mechanism of diverse organisms. Here, we show that yeast aldose reductase is encoded by the GRE3 gene. Expression of GRE3 is carbon-source independent and up-regulated by different stress conditions, such as NaCl, H2O2, 39 degrees C and carbon starvation. Measurements of enzyme activity and intracellular sorbitol in wild-type cells also indicate that yeast aldose reductase is stress-regulated. Overexpression of GRE3 increases methylglyoxal tolerance in Saccharomyces cerevisiae. Furthermore, high expression of GRE3 complements the deficiency of the glyoxalase system of a glo1delta mutant strain. Consistent with this, in vitro and in vivo assays of yeast aldose reductase activity indicate that methylglyoxal is an endogenous substrate of aldose reductase. Furthermore, addition of NaCl or H2O2 to exponential-phase cells triggers an initial transient increase in the intracellular level of methylglyoxal, which is dependent on the Gre3p and Glo1p function. These observations indicate that the metabolism of methylglyoxal is stimulated under stress conditions; and they support a methylglyoxal degradative pathway, in which this compound is metabolised by the action of aldose reductase.