Retinal phosducin is known to sequester transducin Gbetagamma, thereby modulating transducin activity. Phos ducin is a member of a family of phosducin-like proteins (PhLP) found in eukaryotes. Phylogeny of 33 phosducin-like proteins from metazoa, plants and lower eukaryotes identified three distinct groups named phosducin-I-III. We discovered three phlp genes in Dictyostelium, each encoding a phosducin-like protein of a different group. Disruption of the phlp1 gene strongly impaired G-protein signalling, apparently due to mislocalization of Gbetagamma in phlp1-null cells. GFP-Gbeta and GFP-Ggamma are membrane associated in wild-type cells, but cytosolic in phlp1-null cells. Phlp2 disruption is lethal due to a synchronous collapse of the cells after 16-17 cell divisions. Phlp3 disruptants show no abnormal phenotype. These results establish a role for phosducin-like proteins in facilitating folding, localization or function of proteins, in addition to modulating G-protein signalling.