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Betaine derivatives are considered major ingredients of shampoos and are commonly used as antistatic and viscosity-increasing agents. Several studies have also suggested that betaine derivatives can be used as antimicrobial agents. However, the antifungal activity and mechanism of action of betaine derivatives have not yet been fully understood. In this study, we investigated the antifungal activity of six betaine derivatives against Malassezia restricta, which is the most frequently isolated fungus from the human skin and is implicated in the development of dandruff. We found that, among the six betaine derivatives, lauryl betaine showed the most potent antifungal activity. The mechanism of action of lauryl betaine was studied mainly using another phylogenetically close model fungal organism, Cryptococcus neoformans, because of a lack of available genetic manipulation and functional genomics tools for M. restricta. Our genome-wide reverse genetic screening method using the C. neoformans gene deletion mutant library showed that the mutants with mutations in genes for cell membrane synthesis and integrity, particularly ergosterol synthesis, are highly sensitive to lauryl betaine. Furthermore, transcriptome changes in both C. neoformans and M. restricta cells grown in the presence of lauryl betaine were analyzed and the results indicated that the compound mainly affected cell membrane synthesis, particularly ergosterol synthesis. Overall, our data demonstrated that lauryl betaine influences ergosterol synthesis in C. neoformans and that the compound exerts a similar mechanism of action on M. restricta.