Recent studies have suggested that the function of the large GTPase dynamin in endocytosis in mammalian cells may comprise a modulation of actin cytoskeleton. The role of dynamin in actin cytoskeleton organization in the yeast Saccharomyces cerevisiae has remained undefined. In this report, we found that one of the yeast dynamin-related proteins, Vps1p, is required for normal actin cytoskeleton organization. At both permissive and non-permissive temperatures, the vps1 mutants exhibited various degrees of phenotypes commonly associated with actin cytoskeleton defects: depolarized and aggregated actin structures, hypersensitivity to the actin cytoskeleton toxin latrunculin-A, randomized bud site selection and chitin deposition, and impaired efficiency in the internalization of membrane receptors. Over-expression of the GTPase mutants of vps1 also led to actin abnormalities. Consistent with these actin-related defects, Vps1p was found to interact physically, and partially co-localize, with the actin-regulatory protein Sla1p. The normal cellular localization of Sla1p required Vps1p and could be altered by over-expression of a region of Vps1p that was involved in the interaction with Sla1p. The same region also promoted mis-sorting of the vacuolar protein carboxypeptidase Y upon over-expression. These findings suggest that the functions of the dynamin-related protein Vps1p in actin cytoskeleton dynamics and vacuolar protein sorting are probably related to each other.