Protein phosphatase type I (PP1) is involved in diverse cellular processes, and its activity toward specific substrates is thought to be controlled by different regulatory or targeting subunits. To identify regulatory subunits and substrates of the Saccharomyces cerevisiae PP1, encoded by GLC7, we used the two-hybrid system to detect interacting proteins. Among the many proteins identified were Gac1, a known glycogen regulatory subunit, and a protein with homology to Gac1. We also characterized a new gene designated GIP1, for Glc7-interacting protein. We show that a Gip1 fusion protein coimmunoprecipitates with PP1 from cell extracts. Molecular and genetic analyses indicate that GIP1 is expressed specifically during meiosis, affects transcription of late meiotic genes, and is essential for sporulation. Thus, the Gip1 protein is a candidate for a meiosis-specific substrate or regulator of PP1. Finally, we recovered two genes, RED1 and SCD5, with roles in meiosis and the vesicular secretory pathway, respectively. These results provide strong evidence implicating PP1 function in meiosis. In addition, this study indicates that the two-hybrid system offers a promising approach to understanding the multiple roles and interactions of PP1 in cellular regulation.