The yeast spindle pole body (SPB) plays a unique role in meiosis, initiating both spindle assembly and prospore membrane synthesis. SPO1, induced early in development, encodes a meiosis-specific phospholipase B (PLB) homolog required at three stages of SPB morphogenesis: MI, MII, and spore formation. Here we report in-depth analysis of the SPO1 gene including its transcriptional control by regulators of early gene expression, protein localization to the ER lumen and periplasmic space, and molecular genetic studies of its role in meiosis. Evidence is presented that multiple arrest points in spo1Delta occur independently, demonstrating that Spo1 acts at distinct steps. Loss of Spo1 is suppressed by high-copy glycosylphosphatidylinositol (GPI) proteins, dependent on sequence, timing, and strength of induction in meiosis. Since phosphatidylinositol (PI) serves as both an anchor component and a lipase substrate, we hypothesized that GPI-protein expression might substitute for Spo1 by decreasing levels of its potential substrates, PI and phosphatidylinositol phosphates (PIPs). Partial spo1Delta complementation by PLB3 (encoding a unique PLB capable of cleaving PI) and relatively strong Spo1 binding to PI(4)P derivatives (via a novel N-terminal lysine-rich fragment essential for Spo1 function) are consistent with this view. Epistasis of SPO1 mutations to those in SPO14 (encoding a PLD involved in signaling) and physical interaction of Spo1 with Spo23, a protein regulating PI synthesis required for wild-type sporulation, further support this notion. Taken together these findings implicate PI and/or PIPs in Spo1 function and suggest the existence of a novel Spo1-dependent meiosis-specific signaling pathway required for progression of MI, MII, and spore formation via regulation of the SPB.