Ras oncoproteins are monomeric GTPases that link signals from the cell surface to pathways that regulate cell proliferation and differentiation. Constitutively active mutant forms of Ras are found in ca. 30% of human tumors. Here we report the isolation of a novel gene from Saccharomyces cerevisiae, designated ERI1 (for endoplasmic reticulum-associated Ras inhibitor 1), which behaves genetically as an inhibitor of Ras signaling. ERI1 encodes a 68-amino-acid protein that associates in vivo with GTP-bound Ras in a manner that requires an intact Ras-effector loop, suggesting that Eri1 competes for the same binding site as Ras target proteins. We show that Eri1 localizes primarily to the membrane of the endoplasmic reticulum (ER), where it engages Ras. The recent demonstration that signaling from mammalian Ras is not restricted to the cell surface but can also proceed from the cytoplasmic face of the ER suggests a regulatory function for Eri1 at that membrane.