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 Delta 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 Delta 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 Delta 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(alpha) protein Gpa2p in a pathway separate from Ras1p/Ras2p and converging on PKA.