The SAC3 gene of Saccharomyces serevisiae has been implicated in actin function by genetic experiments showing that a temperature sensitive mutation in the essential actin gene (actl-1) can be suppressed by mutations in SAC3. An involvement of SAC3 in actin function is further suggested by the observation that the actin cytoskeleton is altered in SAC3 mutants. Our fractionation experiments, however, point to a nuclear localization of Sac3p. On sucrose density gradients Sac3p co-fractionated with the nuclear organelle markers examined. Furthermore, Sac3p was enriched 10-fold in a nuclei preparation along with the nuclear protein Nop1p. In this report we further show that SAC3 function is required for normal progression of mitosis. SAC3 mutants showed a higher fraction of large-budded cells in culture, indicative of a cell cycle delay. The predominant population among the large-budded sac3 cells were cells with a single nucleus at the bud-neck and a short intranuclear spindle. This suggests that a cell cycle delay occurs in mitosis prior to anaphase. The observation that SAC3 mutants lose chromosomes with higher frequency than wild-type is another indication for a mitotic defect in SAC3 mutants. We further noticed that SAC3 mutants are more resistant against the microtubule destabilizing drug benomyl. This finding suggests that SAC3 is involved, directly or indirectly, in microtubule function. In summary, our data indicate that SAC3 is involved in a process which affects both the actin cytoskeleton and mitosis.