A total of 132 yeast strains were characterised from 4 sediment samples collected from small puddles in the vicinity of Midre Lov,nbreen glacier, Arctic. Based on the D1/D2 domain sequence similarity, the isolates could be categorised into 6 groups. The nearest phylogenetic neighbour of groups I to VI were identified as Cryptococcus gastricus, Cryptococcus terricolus, Rhodotorula muscorum, Mrakia psychrophila, Mrakia gelida and Rhodotorula glacialis, respectively. Strains representative of the six groups were psychrophilic and salt tolerant but varied in their ability to produce cold-active extracellular enzymes such as lipase, protease, pectinase, cellulase and amylase. C-18:1 (w9C) and C-18:2 (w9,C-12C) were the only two fatty acids common to all the yeasts and branched and (or) unsaturated fatty acids increased in yeasts growing at 8A degrees C compared to 22A degrees C, probably as an adaptation to low temperature. The present study establishes that psychrophilic yeasts are predominant in Arctic and could be used as work horses to produce cold-active enzymes and poly unsaturated fatty acids which have been implicated in low temperature adaptation and also for their use in biotechnology.