BTN1, the yeast homolog to human CLN3 (which is defective in Batten disease), has been implicated in the regulation of vacuolar pH, potentially by modulating vacuolar-type H(+)-ATPase (V-ATPase) activity. However, we report that Btn1p and the V-ATPase complex do not physically interact, suggesting that any influence that Btn1p has on V-ATPase is indirect. Because membrane lipid environment plays a crucial role in the activity and function of membrane proteins, we investigated whether cells lacking BTN1 have altered membrane phospholipid content. Deletion of BTN1 (btn1-Δ) led to a decreased level of phosphatidylethanolamine (PtdEtn) in both mitochondrial and vacuolar membranes. In yeast there are two phosphatidylserine (PtdSer) decarboxylases, Psd1p and Psd2p, and these proteins are responsible for the synthesis of PtdEtn in mitochondria and Golgi-endosome, respectively. Deletion of both BTN1 and PSD1 (btn1-Δ psd1-Δ) led to a further decrease in levels of PtdEtn in ER membranes associated to mitochondria (MAMs), with a parallel increase in PtdSer. Fluorescent-labeled PtdSer (NBD-PtdSer) transport assays demonstrated that transport of NBD-PtdSer from the ER to both mitochondria and endosomes and/or vacuole is affected in btn1-Δ cells. Moreover, btn1-Δ affects the synthesis of PtdEtn by the Kennedy pathway and impairs the ability of psd1-Δ cells to restore PtdEtn to normal levels in mitochondria and vacuoles by ethanolamine addition. In summary, lack of Btn1p alters phospholipid levels and might play a role in regulating their subcellular distribution.