N-acetylglucosamine (GlcNAc) exists ubiquitously as a component of the surface on a wide range of cells, from bacteria to humans. Many fungi are able to utilize environmental GlcNAc to support growth and induce cellular development, a property important for their survival in various host niches. However, how the GlcNAc signal is sensed and subsequently transduced is largely unknown. Here, we identify a gene that is essential for GlcNAc signalling (NGS1) in Candida albicans, a commensal and pathogenic yeast of humans. Ngs1 can bind GlcNAc through the N-terminal β-N-acetylglucosaminidase homology domain. This binding activates N-acetyltransferase activity in the C-terminal GCN5-related N-acetyltransferase domain, which is required for GlcNAc-induced promoter histone acetylation and transcription. Ngs1 is targeted to the promoters of GlcNAc-inducible genes constitutively by the transcription factor Rep1. Ngs1 is conserved in diverse fungi that have GlcNAc catabolic genes. Thus, fungi use Ngs1 as a GlcNAc-sensor and transducer for GlcNAc-induced transcription.