Saccharomyces cerevisiae, the budding yeast, is the most thoroughly studied eukaryote at the cellular, molecular, and genetic levels. Yet, until recently, we knew very little about its ecology or population and evolutionary genetics. In recent years, it has been recognized that S. cerevisiae occupies numerous habitats and that populations harbour important genetic variation. There is therefore an increasing interest in understanding the evolutionary forces acting on the yeast genome. Several researchers have used the tools of functional genomics to study natural isolates of this unicellular fungus. Here, we review some of these studies, and show not only that budding yeast is a prime model system to address fundamental molecular and cellular biology questions, but also that it is becoming a powerful model species for ecological and evolutionary genomics studies as well.