The sequence of a Saccharomyces cerevisiae cDNA encoding a novel 61-kDa protein serine/threonine phosphatase, termed PPQ1, is presented. The protein consists of two distinct domains: the carboxy-terminal phosphatase domain is approximately 60% identical to either PP1 or the carboxy-terminal domains of PPZ1 and PPZ2, while the amino-terminal region is rich in serine and asparagine. Deletion of the gene encoding PPQ1 reduces cell growth on several carbon sources, and lowers cell density in the stationary phase. Cells in which PPQ1 gene has been deleted show altered morphology from wild-type cells in the stationary phase in the absence of an essential amino acid and a reduced rate of protein synthesis in the exponential phase. They are hypersensitive to the protein synthesis inhibitors, cycloheximide and G418, implicating PPQ1 in the regulation of translation.