The Saccharomyces cerevisiae N-terminal acetyltransferase NatB consists of the subunits Nat3p and Mdm20p. We found by two-dimensional PAGE analysis that nat3Delta exhibited protein expression during growth in basal medium resembling protein expression in salt-adapted wild-type cells. The stress-induced carboxypeptidase Y (CPY) inhibitor and phosphatidylethanolamine-binding protein family member Tfs1p was identified as a novel NatB substrate. The N-terminal acetylation status of Tfs1p, Act1p, and Rnr4p in both wild type and nat3Delta was confirmed by tandem mass spectrometry. Furthermore it was found that unacetylated Tfs1p expressed in nat3Delta showed an approximately 100-fold decrease in CPY inhibition compared with the acetylated form, indicating that the N-terminal acetyl group is essential for CPY inhibition by Tfs1p. Phosphatidylethanolamine-binding proteins in other organisms have been reported to be involved in the regulation of cell signaling. Here we report that a number of proteins, whose expression has been shown previously to be dependent on the activity in the protein kinase A (PKA) signaling pathway, was found to be regulated in line with low PKA activity in the nat3Delta strain. The involvement of Nat3p and Tfs1p in PKA signaling was supported by caffeine growth inhibition studies. First, growth inhibition by caffeine addition (resulting in enhanced cAMP levels) was suppressed in tfs1Delta. Second, this suppression by tfs1Delta was abolished in the nat3Delta background, indicating that Tfs1p was not functional in the nat3Delta strain possibly because of a lack of N-terminal acetylation. We conclude that the NatB-dependent acetylation of Tfs1p appears to be essential for its inhibitory activity on CPY as well its role in regulating the PKA pathway.