The purpose of this study was to determine the effects of glass transition and hydration on the storage stability of baker's dry yeast (Saccharomyces cerevisiae). The glass transition temperature (T g ) of the yeast decreased with increase in water activity (a w ), and a w at which glass transition occurs at 25 • C was determined as the critical a w (a wc ). From mechanical relaxation measurements at 25 • C, the yeast exhibited a large mechanical relaxation above the a wc , and the degree of mechanical relaxation increased gradually with increasing a w . This behavior corresponded to a gradual increase in molecular mobility with increasing a w in the rubbery liquid state. Freezable water was observed from a w ≥0.810, and the proportion of freezable water increased with increasing a w . Examination of the effect of a w on the residual biological activity of yeast samples stored at 25 • C for 30 days revealed maximum residual biological activity at a w = 0.225 to 0.432. In the lower a w range, the residual biological activity decreased because of oxidation of lipids. In the higher a w range, the residual biological activity decreased gradually with increasing a w . The yeast samples maintained a relatively high residual biological activity, because they could maintain relatively low molecular mobility even in the rubbery liquid state, as suggested by their mechanical relaxation behavior. At a w ≥0.809, residual activity decreased to a negligible value. This could be explained by the appearance of secondary hydrate water (freezable water). Hydrate water protects yeast cells from lipid oxidation but reduces the T g . As a result, the yeast cells are stabilized maximally only at the a wc .Practical Application: Although the growth rate of yeast cells becomes negligible below a certain a w , the biological activity of dry yeast decreases gradually during storage. The fact that dry yeast can be maximally stabilized at the a wc is practically useful as a criterion for controlling storage stability. In addition, it was found that a remarkable reduction in the molecular mobility, which is otherwise ordinarily increased due to the glass-to-rubber transition, is prevented in yeast. It is possible that the crystallization of amorphous sugar can be prevented by yeast extract. The suggested effect is expected to result in enhanced quality of carbohydrate-based foods.