In higher eukaryotes, the activity and specificity of the type 1 protein serine-threonine phosphatase (PP1) catalytic subunit is thought to be controlled by its association with a number of regulatory or targeting subunits. Here we describe the characterization of a gene encoding one such potential polypeptide in the yeast Saccharomyces cerevisiae. The gene which we have isolated (termed SDS22) encodes a product with a high degree of sequence identity to the fission yeast sds22 protein, a known regulator of the mitotic function of PP1 in Schizosaccharomyces pombe. Using two different criteria, we have demonstrated that Sds22p and the catalytic subunit of PP1 (Glc7p) interact in yeast cells. We have also generated a temperature-sensitive allele of GLC7 (glc7-12) which causes a block to the completion of mitosis at the restrictive temperature. Additional copies of SDS22 lead to allele-specific suppression of the glc7-12 mutant, strongly suggesting that the interaction between the two proteins is of functional significance. Sds22p is therefore likely to be the second example of a PP1 regulatory subunit identified in S. cerevisiae.