Mutations in Drosophila merry-go-round (mgr) have been known for over two decades to lead to circular mitotic figures and loss of meiotic spindle integrity. However, the identity of its gene product has remained undiscovered. We now show that mgr encodes the Prefoldin subunit counterpart of human von Hippel Lindau binding-protein 1. Depletion of Mgr from cultured cells also leads to formation of monopolar and abnormal spindles and centrosome loss. These phenotypes are associated with reductions of tubulin levels in both mgr flies and mgr RNAi-treated cultured cells. Moreover, mgr spindle defects can be phenocopied by depleting β-tubulin, suggesting Mgr function is required for tubulin stability. Instability of β-tubulin in the mgr larval brain is less pronounced than in either mgr testes or in cultured cells. However, expression of transgenic β-tubulin in the larval brain leads to increased tubulin instability, indicating that Prefoldin might only be required when tubulins are synthesized at high levels. Mgr interacts with Drosophila von Hippel Lindau protein (Vhl). Both proteins interact with unpolymerized tubulins, suggesting they cooperate in regulating tubulin functions. Accordingly, codepletion of Vhl with Mgr gives partial rescue of tubulin instability, monopolar spindle formation, and loss of centrosomes, leading us to propose a requirement for Vhl to promote degradation of incorrectly folded tubulin in the absence of functional Prefoldin. Thus, Vhl may play a pivotal role: promoting microtubule stabilization when tubulins are correctly folded by Prefoldin and tubulin destruction when they are not.