Fungal infections arise frequently in immunocompromised patients, and sterol synthesis is a primary pathway targeted by antifungal drugs. In particular, the P450 protein Erg11/Cyp51 catalyzes a critical step in ergosterol synthesis, and the azole class of antifungal drugs inhibits Erg11. Dap1 is a heme-binding protein related to cytochrome b5 that activates Erg11, so that cells lacking Dap1 accumulate the Erg11 substrate and are hypersensitive to Erg11 inhibitors. Heme binding by Dap1 is crucial for its function, and point mutants in its heme-binding domain render Dap1 inactive for sterol biosynthesis and DNA damage resistance. Like Dap1, the human homologue, PGRMC1/Hpr6, also regulates sterol synthesis and DNA damage resistance. In the present study, we demonstrate that the Dap1 heme-1 domain is required for growth under conditions of low iron availability. Loss of Dap1 is suppressed by elevated levels of Erg11 but not by increased heme biosynthesis. Dap1 localizes to punctate cytoplasmic structures that co-fractionate with endosomes, and Dap1 contributes to the integrity of the vacuole. The results suggest that Saccharomyces cerevisiae Dap1 stimulates a P450-catalyzed step in sterol synthesis via a distinct localization from its homologues in Schizosaccharomyces pombe and mammals and that this function regulates iron metabolism.