In Saccharomyces cerevisiae, integral plasma membrane proteins destined for degradation and certain vacuolar membrane proteins are sorted into the lumen of the vacuole via the multivesicular body (MVB) sorting pathway, which depends on the sequential action of three endosomal sorting complexes required for transport. Here, we report the characterization of a new positive modulator of MVB sorting, Ist1. We show that endosomal recruitment of Ist1 depends on ESCRT-III. Deletion of IST1 alone does not cause cargo-sorting defects. However, synthetic genetic analysis of double mutants of IST1 and positive modulators of MVB sorting showed that ist1Δ is synthetic with vta1Δ and vps60Δ, indicating that Ist1 is also a positive component of the MVB-sorting pathway. Moreover, this approach revealed that Ist1-Did2 and Vta1-Vps60 compose two functional units. Ist1-Did2 and Vta1-Vps60 form specific physical complexes, and, like Did2 and Vta1, Ist1 binds to the AAA-ATPase Vps4. We provide evidence that the ist1Δ mutation exhibits a synthetic interaction with mutations in VPS2 (DID4) that compromise the Vps2-Vps4 interaction. We propose a model in which the Ist1-Did2 and Vta1-Vps60 complexes independently modulate late steps in the MVB-sorting pathway.