Specific changes in membrane lipid composition are implicated in actin cytoskeletal organization, vesicle formation, and control of cell polarity. Cdc50p, a membrane protein in the endosomal/trans-Golgi network compartments, is a noncatalytic subunit of Drs2p, which is implicated in translocation of phospholipids across lipid bilayers. We found that the cdc50⌬ mutation is synthetically lethal with mutations affecting the late steps of ergosterol synthesis (erg2 to erg6). Defects in cell polarity and actin organization were observed in the cdc50⌬ erg3⌬ mutant. In particular, actin patches, which are normally found at cortical sites, were assembled intracellularly along with their assembly factors, including Las17p, Abp1p, and Sla2p. The exocytic SNARE Snc1p, which is recycled by an endocytic route, was also intracellularly accumulated, and inhibition of endocytic internalization suppressed the cytoplasmic accumulation of both Las17p and Snc1p. Simultaneous loss of both phospholipid asymmetry and sterol structural integrity could lead to accumulation of endocytic intermediates capable of initiating assembly of actin patches in the cytoplasm.