Ribosome binding to eukaryotic mRNA is a multistep process which is mediated by the cap structure [m(7)G(5')ppp(5')N, where N is any nucleotide] present at the 5' termini of all cellular (with the exception of organellar) mRNAs. The heterotrimeric complex, eukaryotic initiation factor 4F (eIF4F), interacts directly with the cap structure via the eIF4E subunit and functions to assemble a ribosomal initiation complex on the mRNA. In mammalian cells, eIF4E activity is regulated in part by three related translational repressors (4E-BPs), which bind to eIF4E directly and preclude the assembly of eIF4F. No structural counterpart to 4E-BPs exists in the budding yeast, Saccharomyces cerevisiae. However, a functional homolog (named p20) has been described which blocks cap-dependent translation by a mechanism analogous to that of 4E-BPs. We report here on the characterization of a novel yeast eIF4E-associated protein (Eap1p) which can also regulate translation through binding to eIF4E. Eap1p shares limited homology to p20 in a region which contains the canonical eIF4E-binding motif. Deletion of this domain or point mutation abolishes the interaction of Eap1p with eIF4E. Eap1p competes with eIF4G (the large subunit of the cap-binding complex, eIF4F) and p20 for binding to eIF4E in vivo and inhibits cap-dependent translation in vitro. Targeted disruption of the EAP1 gene results in a temperature-sensitive phenotype and also confers partial resistance to growth inhibition by rapamycin. These data indicate that Eap1p plays a role in cell growth and implicates this protein in the TOR signaling cascade of S. cerevisiae.