The vacuole/lysosome serves an essential role in allowing cellular components to be degraded and recycled under starvation conditions. Vacuolar hydrolases are key proteins in this process. In Saccharyomces cerevisiae, some resident vacuolar hydrolases are delivered by the cytoplasm to vacuole targeting (Cvt) pathway, which shares mechanistic features with autophagy. Autophagy is a degradative pathway that is used to degrade and recycle cellular components under starvation conditions. Both the Cvt pathway and autophagy employ double-membrane cytosolic vesicles to deliver cargo to the vacuole. As a result, these pathways share a common terminal step, the degradation of subvacuolar vesicles. We have identified a protein, Cvt17, which is essential for this membrane lytic event. Cvt17 is a membrane glycoprotein that contains a motif conserved in esterases and lipases. The active-site serine of this motif is required for subvacuolar vesicle lysis. This is the first characterization of a putative lipase implicated in vacuolar function in yeast.