The Ipl1 protein kinase is essential for proper chromosome segregation and cell viability in the budding yeast Saccharomyces cerevisiae. We have previously shown that the temperature-sensitive growth phenotype of conditional ipl1-1ts mutants can be suppressed by a partial loss-of-function mutation in the GLC7 gene, which encodes the catalytic subunit (PP1C) of protein phosphatase 1, thus suggesting that this enzyme acts in opposition to the Ipl1 protein kinase in regulating yeast chromosome segregation. We report here that the Glc8 protein, which is related in primary sequence to mammalian inhibitor 2, also participates in this regulation. Like inhibitor 2, the Glc8 protein is heat stable, exhibits anomalous electrophoretic mobility, and functions in vitro as an inhibitor of yeast as well as rabbit skeletal muscle PP1C. Interestingly, overexpression as well as deletion of the GLC8 gene results in a partial suppression of the temperature-sensitive growth phenotype of ipl1ts mutants and also moderately reduces the amount of protein phosphatase 1 activity which is assayable in crude yeast lysates. In addition, the chromosome missegregation phenotype caused by an increase in the dosage of GLC7 is totally suppressed by the glc8-delta 101::LEU2 deletion mutation. These findings together suggest that the Glc8 protein is involved in vivo in the activation of PP1C and that when the Glc8 protein is overproduced, it may also inhibit PP1C function. Furthermore, site-directed mutagenesis studies of GLC8 suggest that Thr-118 of the Glc8 protein, which is equivalent to Thr-72 of inhibitor 2, may play a central role in the ability of this protein to activate and/or inhibit PP1C in vivo.