The exocyst is an essential multiprotein complex mediating polarized secretion in yeast. Here we describe a gene, SEM1, that can multicopy-suppress exocyst mutants sec3-2, sec8-9, sec10-2, and sec15-1. SEM1 is highly conserved among eukaryotic species. Its human homologue, DSS1, has been suggested as a candidate gene for the split hand/split foot malformation disorder. SEM1 is not an essential gene. However, its deletion rescued growth of the temperature-sensitive exocyst mutants sec3-2, sec8-9, sec10-1, and sec15-1 at the restrictive temperature. Cell fractionation showed that Sem1p is mainly cytosolic but also associates with the microsomal fraction. In linear sucrose gradients, Sem1p cosedimented with the exocyst component Sec8p. In diploid cells that normally do not form pseudohyphae (S288C background), deletion of SEM1 triggered pseudohyphal growth. This phenotype was abolished after reintroduction of either SEM1 or the mouse homologue Dss1 into the cells. In diploids that have normal capacity for pseudohyphal growth (Sigma1278b background), deletion of SEM1 enhanced filamentous growth. The functionality of both SEM1 and Dss1 in a differentiation process in yeast suggests that Dss1 indeed could be the gene affected in the split hand/split foot malformation disorder. These results characterize SEM1 as a regulator of both exocyst function and pseudohyphal differentiation and suggest a unique link between these two cellular functions in yeast.