In the yeast Saccharomyces cerevisiae, the Opi1p repressor controls the expression of INO1 via the Opi1p/Ino2p-Ino4p regulatory circuit. Inositol depletion favors Opi1p interaction with both Scs2p and phosphatidic acid at the endoplasmic reticulum (ER) membrane. Inositol supplementation, however, favors the translocation of Opi1p from the ER into the nucleus, where it interacts with the Ino2p-Ino4p complex, attenuating transcription of INO1. A strain devoid of Scs2p (scs2⌬) and a mutant, OPI1FFAT, lacking the ability to interact with Scs2p were utilized to examine the specific role(s) of the Opi1p-Scs2p interaction in the regulation of INO1 expression and overall lipid metabolism. Loss of the Opi1p-Scs2p interaction reduced INO1 expression and conferred inositol auxotrophy. Moreover, inositol depletion in strains lacking this interaction resulted in Opi1p being localized to sites of lipid droplet formation, coincident with increased synthesis of triacylglycerol. Supplementation of choline to inositol-depleted growth medium led to decreased TAG synthesis in all three strains. However, in strains lacking the Opi1p-Scs2p interaction, Opi1p remained in the nucleus, preventing expression of INO1. These data support the conclusion that a specific pool of phosphatidic acid, associated with lipid droplet formation in the perinuclear ER, is responsible for the initial rapid exit of Opi1p from the nucleus to the ER and is required for INO1 expression in the presence of choline. Moreover, the mitochondria-specific phospholipid, cardiolipin, was significantly reduced in both strains compromised for Opi1p-Scs2p interaction, indicating that this interaction is required for the transfer of phosphatidic acid from the ER to the mitochondria for cardiolipin synthesis.