ABSTRACT Phosphatidylinositol phosphates are involved in signal transduction, cytoskeletal organization, and membrane trafficking. Inositol polyphosphates, produced from phosphatidylinositol phosphates by the phospholipase C-dependent pathway, regulate chromatin remodeling. We used genome-wide expression analysis to further investigate the roles of Plc1p (phosphoinositide-specific phospholipase C in Saccharomyces cerevisiae ) and inositol polyphosphates in transcriptional regulation. Plc1p contributes to the regulation of approximately 2% of yeast genes in cells grown in rich medium. Most of these genes are induced by nutrient limitation and other environmental stresses and are derepressed in plc1 Δ cells. Surprisingly, genes regulated by Plc1p do not correlate with gene sets regulated by Swi/Snf or RSC chromatin remodeling complexes but show correlation with genes controlled by Msn2p. Our results suggest that the increased expression of stress-responsive genes in plc1 Δ cells is mediated by decreased cyclic AMP synthesis and protein kinase A (PKA)-mediated phosphorylation of Msn2p and increased binding of Msn2p to stress-responsive promoters. Accordingly, plc1 Δ cells display other phenotypes characteristic of cells with decreased PKA activity. Our results are consistent with a model in which Plc1p acts together with the membrane receptor Gpr1p and associated G _α protein Gpa2p in a pathway separate from Ras1p/Ras2p and converging on PKA.