gamma-Tubulin is essential for microtubule nucleation in yeast and other organisms; whether this protein is regulated in vivo has not been explored. We show that the budding yeast gamma-tubulin (Tub4p) is phosphorylated in vivo. Hyperphosphorylated Tub4p isoforms are restricted to G1. A conserved tyrosine near the carboxy terminus (Tyr445) is required for phosphorylation in vivo. A point mutation, Tyr445 to Asp, causes cells to arrest prior to anaphase. The frequency of new microtubules appearing in the SPB region and the number of microtubules are increased in tub4-Y445D cells, suggesting this mutation promotes microtubule assembly. These data suggest that modification of gamma-tubulin is important for controlling microtubule number, thereby influencing microtubule organization and function during the yeast cell cycle.