1,3-beta-D-Glucan, a major filamentous component of the cell wall in the budding yeast Saccharomyces cerevisiae, is synthesized by 1,3-beta-glucan synthase (GS). Although a yeast gene whose product is required for GS activity in vitro, GNS1, was isolated and characterized, its role in GS function has remained unknown. In the current study we show that Deltagns1 cells accumulate a non-competitive and non-proteinous inhibitor(s) in the membrane fraction. Investigations of inhibitory activity on GS revealed that the inhibitor(s) is mainly present in the sphingolipid fraction. It is shown that Deltagns1 cells contain phytosphingosine (PHS), an intermediate in the sphingolipid biosynthesis, 30-fold more than wild-type cells do. The membrane fraction isolated from Deltasur2 cells contains an increased amount of dihydrosphingosine (DHS) and also exhibits reduced GS activity. Among constituents of the sphingolipid fraction, PHS and DHS show striking inhibition in a non-competitive manner. The intracellular level of DHS is much lower than that of PHS in wild-type cells, suggesting that PHS is the primary inhibitor of GS in vivo. The localization of PHS to the endoplasmic reticulum in wild-type cells coincides with that of the inhibitor(s) in Deltagns1 cells. Taken together, our results indicate that PHS is a potent inhibitor of yeast GS in vivo.