In response to nitrogen starvation, diploid cells of the budding yeast Saccharomyces cerevisiae differentiate into a filamentous, pseudohyphal growth form. This dimorphic transition is regulated by the Gα protein GPA2, by RAS2, and by elements of the pheromone‐responsive MAP kinase cascade, yet the mechanisms by which nitrogen starvation is sensed remain unclear. We have found that MEP2, a high affinity ammonium permease, is required for pseudohyphal differentiation in response to ammonium limitation. In contrast, MEP1 and MEP3, which are lower affinity ammonium permeases, are not required for filamentous growth. Δmep2 mutant strains had no defects in growth rates or ammonium uptake, even at limiting ammonium concentrations. The pseudohyphal defect of Δmep2/Δmep2 strains was suppressed by dominant active GPA2 or RAS2 mutations and by addition of exogenous cAMP, but was not suppressed by activated alleles of the MAP kinase pathway. Analysis of MEP1/MEP2 hybrid proteins identified a small intracellular loop of MEP2 involved in the pseudohyphal regulatory function. In addition, mutations in GLN3, URE2 and NPR1, which abrogate MEP2 expression or stability, also conferred pseudohyphal growth defects. We propose that MEP2 is an ammonium sensor, generating a signal to regulate filamentous growth in response to ammonium starvation.