The MSI1 (CAC3) gene of Saccharomyces cerevisiae has been implicated in diverse cellular functions, including suppression of the RAS/cAMP/protein kinase A signaling pathway, chromatin assembly and transcriptional co-repression. Seeking to identify the molecular mechanisms by which Msi1p carries out these distinct activities, a novel genetic interaction was uncovered with YAK1, which encodes a kinase that antagonizes the RAS/cAMP pathway. MSI1 was capable of efficiently suppressing the heat shock sensitivity caused by deletion of yak1. Surprisingly, the YAK1 gene is required for Msi1p to associate with Cac1p in the yeast two-hybrid system. A new activity of Msi1p was identified: the ability to activate transcription of a reporter gene when tethered near the promoter, but only in the absence of fermentable carbon sources. This transcriptional activation function was diminished substantially by the loss of YAK1. Furthermore, MSI1 influences YAK1 function; over-expression of YAK1 decreased the growth rate, but only in the presence of a functional MSI1 gene. Finally, it is shown that YAK1 antagonizes nuclear accumulation of Msi1p in non-fermenting cells. Taken together, these data demonstrate a novel interaction between Msi1p and Yak1p in which each protein influences the activity of the other.