[PSI+] is a protein-based heritable phenotype of the yeast Saccharomyces cerevisiae which reflects the prion-like behaviour of the endogenous Sup35p protein release factor. [PSI+] strains exhibit a marked decrease in translation termination efficiency, which permits decoding of translation termination signals and, presumably, the production of abnormally extended polypeptides. We have examined whether the [PSI+]-induced expression of such an altered proteome might confer some selective growth advantage over [psi-] strains. Although otherwise isogenic [PSI+] and [psi-] strains show no difference in growth rates under normal laboratory conditions, we demonstrate that [PSI+] strains do exhibit enhanced tolerance to heat and chemical stress, compared with [psi-] strains. Moreover, we also show that the prion-like determinant [PSI+] is able to regulate translation termination efficiency in response to environmental stress, since growth in the presence of ethanol results in a transient increase in the efficiency of translation termination and a loss of the [PSI+] phenotype. We present a model to describe the prion-mediated regulation of translation termination efficiency and discuss its implications in relation to the potential physiological role of prions in S.cerevisiae and other fungi.