In response to a number of distinct environmental conditions, the fungal pathogen Candida albicans undergoes a morphological transition from a round, yeast form to a series of elongated, filamentous forms. This transition is believed to be critical for virulence in a mouse model of disseminated candidiasis. Here we describe the characterization of C. albicans ASH1, a gene that encodes an asymmetrically localized transcriptional regulatory protein involved in this response. We show that C. albicans ash1 mutants are defective in responding to some filament-inducing conditions. We also show that Ash1p is preferentially localized to daughter cell nuclei in the budding-yeast form of C. albicans cell growth and to the hyphal tip cells in growing filaments. Thus, Ash1p "marks" newly formed cells and presumably directs a specialized transcriptional program in these cells. Finally, we show that ASH1 is required for full virulence of C. albicans in a mouse model of disseminated candidiasis.