The catalytic subunit of protein phosphatase type 1 (PP1) has an essential role in mitosis, acting in opposition to the Ipl1/Aurora B protein kinase to ensure proper kinetochore-microtubule interactions. However, the regulatory subunit(s) that completes the PP1 holoenzyme that functions in this capacity is not known. We show here that the budding yeast Ypi1 protein is a nuclear protein that functions with PP1 (Glc7) in this mitotic role. Depletion of cellular Ypi1 induces mitotic arrest due to activation of the spindle checkpoint. Ypi1 depletion is accompanied by a reduction of nuclear PP1 and by loss of nuclear Sds22, a Glc7 binding partner that is found in a ternary complex with Ypi1 and Glc7. Expression of a Ypi1 variant that binds weakly to PP1 also activates the spindle checkpoint and suppresses the temperature sensitivity of an ipl1-2 mutant. These results, together with genetic interactions among YPI1, GLC7, and SDS22 mutants, indicate that Ypi1 and Sds22 are positive regulators of the nuclear Glc7 activity that is required for mitosis.