In Saccharomyces cerevisiae the ROM2 gene encodes a GDP/GTP exchange factor for the small G-protein Rho1p, a known activator of protein kinase C. In a screen designed to isolate suppressors of a rom2 mutant allele, we identified a mutant defective in the gene coding for the putative GTPase-activating protein Lrg1p. This protein was previously suggested to be involved in sporulation and mating. Here we provide evidence for its role in Pkc1p-mediated signal transduction based on the following results. (1) Deletion of LRG1 suppresses the growth phenotypes associated with mutations in SLG1 (which codes for a putative sensor of cell wall damage). (2) Using two-hybrid assays an interaction between the GAP domain of Lrg1p and Rho1p was demonstrated. (3) The lrg1 mutant shows enhanced activity of the Pkc1p pathway. (4) Overexpression of LRG1 leads to a cell lysis defect that can be suppressed by the addition of osmotic stabilizers. Phenotypic comparison of lrg1 mutants with mutants defective in other GTPase-activating proteins (Sac7p, Bem2p, Bag7p) presumed to act on Rho1p revealed that deletion of SAC7, but not BEM2 or BAG7, suppresses the phenotype of rom2 mutants. Pairwise combination of mutations in all these genes showed that the simultaneous deletion of SAC7 and LRG1 is synthetically lethal. We therefore suggest that Lrg1p acts as a negative regulator of the Pkc1p pathway in conjunction with its known homologue Sac7p.