We have characterized LUV1/RKI1/TCS3/VPS54, a novel yeast gene required to maintain normal vacuolar morphology. The luv1 mutant was identified in a genetic screen for mutants requiring the phosphatase calcineurin for vegetative growth. luv1 mutants lack a morphologically intact vacuole and instead accumulate small vesicles that are acidified and contain the vacuolar proteins alkaline phosphatase and carboxypeptidase Y and the vacuolar membrane H+-ATPase. Endocytosis appears qualitatively normal in luv1 mutants, but some portion (28%) of carboxypeptidase Y is secreted. luv1 mutants are sensitive to several ions (Zn2+, Mn2+, and Cd2+) and to pH extremes. These mutants are also sensitive to hygromycin B, caffeine, and FK506, a specific inhibitor of calcineurin. Some vacuolar protein-sorting mutants display similar drug and ion sensitivities, including sensitivity to FK506. Luv1p sediments at 100,000 x g and can be solubilized by salt or carbonate, indicating that it is a peripheral membrane protein. A Green Fluorescent Protein-Luv1 fusion protein colocalizes with the dye FM 4-64 at the endosome, and hemagglutinin-tagged Luv1p colocalizes with the trans-Golgi network/endosomal protease Kex2p. Computer analysis predicts a short coiled-coil domain in Luv1p. We propose that this protein maintains traffic through or the integrity of the early endosome and that this function is required for proper vacuolar morphology.