Yeast protein, Bee1, exhibits sequence homology to Wiskott-Aldrich syndrome protein (WASP), a human protein that may link signaling pathways to the actin cytoskeleton, Mutations in WASP are the primary cause of Wiskott-Aldrich syndrome, characterized by immune-deficiencies and defects in blood cell morphogenesis. This report describes the characterization of Peel protein function in budding yeast, Disruption of BEE1 causes a striking change in the organization of actin filaments, resulting in defects in budding and cytokinesis. Rather than assemble into cortically associated patches, actin filaments in the buds of Delta beel cells form aberrant bundles that do not contain most of the cortical cytoskeletal components. It is significant that Delta beel is the only mutation reported so far that abolishes cortical actin patches in the bud, Peel protein is localized to actin patches and interacts with Sla1p, a Src homology 3 domain-containing protein previously implicated in actin assembly and function. Thus, Peel protein may be a crucial component of a cytoskeletal complex that controls the assembly and organization of actin filaments at the cell cortex.