The VPS34 gene product (Vps34p) is required for protein sorting to the lysosome-like vacuole of the yeast Saccharomyces cerevisiae. Vps34p shares significant sequence similarity with the catalytic subunit of bovine phosphatidylinositol (PI) 3-kinase [the 110-kilodalton (p110) subunit of PI 3-kinase], which is known to interact with activated cell surface receptor tyrosine kinases. Yeast strains deleted for the VPS34 gene or carrying vps34 point mutations lacked detectable PI 3-kinase activity and exhibited severe defects in vacuolar protein sorting. Overexpression of Vps34p resulted in an increase in PI 3-kinase activity, and this activity was specifically precipitated with antisera to Vps34p. VPS34 encodes a yeast PI 3-kinase, and this enzyme appears to regulate intracellular protein trafficking decisions.