The GLC7 gene of Saccharomyces cerevisiae encodes the catalytic subunit of type 1 protein phosphatase (PP1) and is essential for cell growth. We have isolated a previously uncharacterized gene, REG2, on the basis of its ability to interact with Glc7p in the two-hybrid system. Reg2p interacts with Glc7p in vivo, and epitope-tagged derivatives of Reg2p and Glc7p coimmunoprecipitate from cell extracts. The predicted protein product of the REG2 gene is similar to Reg1p, a protein believed to direct PP1 activity in the glucose repression pathway. Mutants with a deletion of reg1 display a mild slow-growth defect, while reg2 mutants exhibit a wild-type phenotype. However, mutants with deletions of both reg1 and reg2 exhibit a severe growth defect. Overexpression of REG2 complements the slow-growth defect of a reg1 mutant but does not complement defects in glycogen accumulation or glucose repression, two traits also associated with a reg1 deletion. These results indicate that REG1 has a unique role in the glucose repression pathway but acts together with REG2 to regulate some as yet uncharacterized function important for growth. The growth defect of a reg1 reg2 double mutant is alleviated by a loss-of-function mutation in the SNF1-encoded protein kinase. The snf1 mutation also suppresses the glucose repression defects of reg1. Together, our data are consistent with a model in which Reg1p and Reg2p control the activity of PP1 toward substrates that are phosphorylated by the Snf1p kinase.