Phaffia rhodozyma was isolated by Herman Phaff in the 1960s, during his pioneering studies of yeast ecology. Initially, the yeast was isolated from limited geographical regions, but isolates were subsequently obtained from Russia, Chile, Finland, and the United States. The biological diversity of the yeast is more extensive than originally envisioned by Phaff and his collaborators, and at least two species appear to exist, including the anamorph Phaffia rhodozyma and the teleomorph Xanthophyllomyces dendrorhous. The yeast has attracted considerable biotechnological interest because of its ability to synthesize the economically important carotenoid astaxanthin (3,3´-dihydroxy-β, β-carotene-4,4´-dione) as its major pigment. This property has stimulated research on the biology of the yeast as well as development of the yeast as an industrial microorganism for astaxanthin production by fermentation. Our laboratory has isolated several mutants of the yeast affected in carotenogenesis, giving colonies a vivid array of pigmentation. We have found that nutritional and environmental conditions regulate astaxanthin biosynthesis in the yeast, and have demonstrated that astaxanthin protects P. rhodozyma from damage by reactive oxygen species. We proposed in the 1970s that P. rhodozyma could serve as an economically important pigment source in animal diets including salmonids, lobsters, and the egg yolks of chickens and quail, in order to impart characteristic and desirable colors. Although P. rhodozyma/Xanthomyces dendrorhous has been studied by various researchers for nearly 30 years, it still attracts interest from yeast biologists and biotechnologists. There is a bright and colorful outlook for P. rhodozyma/X. dendrorhous from fundamental and applied research perspectives.