The budding yeast spindle pole body (SPB) is anchored in the nuclear envelope so that it can simultaneously nucleate both nuclear and cytoplasmic microtubules. During SPB duplication, the newly formed SPB is inserted into the nuclear membrane. The mechanism of SPB insertion is poorly understood but likely involves the action of integral membrane proteins to mediate changes in the nuclear envelope itself, such as fusion of the inner and outer nuclear membranes. Analysis of the functional domains of the budding yeast SUN protein and SPB component Mps3 revealed that most regions are not essential for growth or SPB duplication under wild-type conditions. However, a novel dominant allele in the P-loop region, MPS3-G186K, displays defects in multiple steps in SPB duplication, including SPB insertion, indicating a previously unknown role for Mps3 in this step of SPB assembly. Characterization of the MPS3-G186K mutant by electron microscopy revealed severe over-proliferation of the inner nuclear membrane, which could be rescued by altering the characteristics of the nuclear envelope using both chemical and genetic methods. Lipid profiling revealed that cells lacking MPS3 contain abnormal amounts of certain types of polar and neutral lipids, and deletion or mutation of MPS3 can suppress growth defects associated with inhibition of sterol biosynthesis, suggesting that Mps3 directly affects lipid homeostasis. Therefore, we propose that Mps3 facilitates insertion of SPBs in the nuclear membrane by modulating nuclear envelope composition.