Oxysterol binding protein (OSBP) and its homologs have been shown to regulate lipid metabolism and vesicular transport. However, the exact molecular function of individual OSBP homologs remains uncharacterized. Here we demonstrate that the yeast OSBP homolog, Osh6p, bound phosphatidic acid and phosphoinositides via its N-terminal half containing the conserved OSBP-related domain (ORD). Using a green fluorescent protein fusion chimera, Osh6p was found to localize to the cytosol and patch-like or punctate structures in the vicinity of the plasma membrane. Further examination by domain mapping demonstrated that the N-terminal half was associated with FM4-64 positive membrane compartments; however, the C-terminal half containing a putative coiled-coil was localized to the nucleoplasm. Functional analysis showed that the deletion of OSH6 led to a significant increase in total cellular ergosterols, whereas OSH6 overexpression caused both a significant decrease in ergosterol levels and resistance to nystatin. Oleate incorporation into sterol esters was affected in OSH6 overexpressing cells. However, Lucifer yellow internalization, and FM4-64 uptake and transport were unaffected in both OSH6 deletion and overexpressing cells. Furthermore, osh6Delta exhibited no defect in carboxypeptidase Y transport and maturation. Lastly, we demonstrated that both the conserved ORD and the putative coiled-coil motif were indispensable for the in vivo function of Osh6p. These data suggest that Osh6p plays a role primarily in regulating cellular sterol metabolism, possibly stero transport.