In the yeast Saccharomyces cerevisiae, Dgk1 diacylglycerol (DAG) kinase catalyzes the CTP-dependent phosphorylation of DAG to form phosphatidic acid (PA). The enzyme in conjunction with Pah1 PA phosphatase controls the levels of PA and DAG for the synthesis of triacylglycerol and membrane phospholipids, the growth of the nuclear/endoplasmic reticulum membrane, and the formation of lipid droplets. Little is known about how DAG kinase activity is regulated by posttranslational modification. In this work, we examined the phosphorylation of Dgk1 DAG kinase by casein kinase II (CKII). When phosphate groups were globally reduced using nonspecific alkaline phosphatase, Triton X-100-solubilized membranes from DGK1-overexpressing cells showed a 7.7-fold reduction in DAG kinase activity; the reduced enzyme activity could be increased 5.5-fold by treatment with CKII. Dgk1(1-77) expressed heterologously in Escherichia coli was phosphorylated by CKII on a serine residue, and its phosphorylation was dependent on time as well as on the concentrations of CKII, ATP, and Dgk1(1-77). We used site-specific mutagenesis, coupled with phosphorylation analysis and phosphopeptide mapping, to identify Ser-45 and Ser-46 of Dgk1 as the CKII target sites, with Ser-46 being the major phosphorylation site. In vivo, the S46A and S45A/S46A mutations of Dgk1 abolished the stationary phase-dependent stimulation of DAG kinase activity. In addition, the phosphorylation-deficient mutations decreased Dgk1 function in PA production and in eliciting pah1Δ phenotypes, such as the expansion of the nuclear/endoplasmic reticulum membrane, reduced lipid droplet formation, and temperature sensitivity. This work demonstrates that the CKII-mediated phosphorylation of Dgk1 regulates its function in the production of PA.