Inhibitor-1 (I-1) is a specific inhibitor of protein phosphatase-1 (PP1). We assayed the ability of I-1 to inhibit Saccharomyces cerevisiae PP1, Glc7p, in vivo. Glc7p like other PP1 catalytic subunits associates with a variety of noncatalytic subunits, and Glc7p holoenzymes perform distinct physiological roles. Our results show that I-1 inhibits Glc7p holoenzymes that regulate transcription and mitosis, but holoenzymes responsible for meiosis and glycogen metabolism were unaffected. Additionally, we exploited a genetic screen for mutants that were dependent on I-1 to grow. This scheme can identify processes that are negatively regulated by Glc7p-catalyzed dephosphorylation. In this paper I-1-dependent gfa1 mutations were analyzed in detail. GFA1 encodes glutamine-fructose-6-phosphate transaminase. One or more phosphorylated proteins activate GFA1 transcription because the pheromone response and Pkc1p/mitogen-activated protein kinase pathways positively regulate GFA1 transcription. Our findings show that an I-1-sensitive Glc7p holoenzyme reduces GFA1 transcription. Therefore, GFA1 is a member of a growing list of genes that are negatively regulated by Glc7p dephosphorylation.