Control of actin assembly nucleated by the Arp2/3 complex plays a crucial role during budding yeast endocytosis. The yeast Eps15-related Arp2/3 complex activator, Pan1p, is essential for endocytic internalization and proper actin organization. Pan1p activity is negatively regulated by Prk1 kinase phosphorylation after endocytic internalization. Phosphorylated Pan1p is probably then dephosphorylated in the cytosol. Pan1p is recruited to endocytic sites approximately 25 s before initiation of actin polymerization, suggesting that its Arp2/3 complex activation activity is kept inactive during early stages of endocytosis by a yet-to-be-identified mechanism. However, how Pan1p is maintained in an inactive state is not clear. Using tandem affinity purification-tagged Pan1p, we identified End3p as a stoichiometric component of the Pan1p complex, and Sla2p, a yeast Hip1R-related protein, as a novel binding partner of Pan1p. Interestingly, Sla2p specifically inhibited Pan1p Arp2/3 complex activation activity in vitro. The coiled-coil region of Sla2p was important for Pan1p inhibition, and a pan1 partial loss-of-function mutant suppressed the temperature sensitivity, endocytic phenotypes, and actin phenotypes observed in sla2DeltaCC mutant cells that lack the coiled-coil region. Overall, our results establish that Sla2p's regulation of Pan1p plays an important role in controlling Pan1p-stimulated actin polymerization during endocytosis.