It is well known that yeast cells survive environmental stresses such as desiccation and freezing and there is evidence that these phenomena may be related to the presence of trehalose in the cells. However, the molecular mechanism by which trehalose might exert an influence on cell functions remains unknown. In this report, thermogravimetry and differential thermal analysis were used to estimate the amount of bound water in yeast cells. It is shown that when the trehalose content is greater than 2–3% of the cell dry weight, the amount of bound water is drastically decreased and the viability of the dried cells is increased. This implies that a major portion of the bound water is replaced by trehalose. In addition, measurements of the NMR spin-lattice relaxation time of the intracellular water protons show that trehalose acts as a water-structuring agent in hydrated yeast cells. This dual role is essential for high resistance to water stress in yeast cells.