Penta-EF-hand (PEF) proteins bind calcium and participate in a variety of calcium-dependent processes in vertebrates. In yeast, intracellular cations regulate processes like cell division and polarized growth. This study reports the identification of a unique PEF protein in Saccharomyces cerevisiae encoded by the uncharacterized open reading frame YGR058w. Pef1p has a long and unstructured N-terminal domain conserved in ascomycetes, and a highly conserved C-terminal calcium binding domain homologous to human ALG-2 and sorcin. Pef1p binds calcium and zinc and homodimerizes in vitro and in vivo like vertebrate homologues. Disruption of PEF1 induces defective growth in SDS and cation depletion conditions. Significantly, a critical substitution in the second EF hand (E218A) lowers the in vitro affinity for zinc and phenocopies growth defects. The dissection of protein-protein interactions and the cellular localization of Pef1p analogous to that of RAM pathway components controlling daughter-specific gene expression at the site of bud emergence bring out the importance of this novel protein. Our data suggest that cation homeostasis is involved in the control of polarized growth and in stress response in budding yeast.