The SAGA (Spt-Ada-Gcn5 acetyltransferase) complex of Saccharomyces cerevisiae contains more than 20 components that acetylate and deubiquitylate nucleosomal histones. Its acetyltransferase, Gcn5, preferentially acetylates histones H3 and H2B and is regulated through interactions with Ada2 and Ngg1/Ada3. Sequence alignments of Ada2 homologs indicate a conserved approximately 120-amino-acid-residue central region. To examine the function of this region, we constructed ada2 alleles with mutations of clustered conserved residues. One of these alleles, ada2-RLR (R211S, L212A, and R215A), resulted in an approximately threefold reduction in transcriptional activation of the PHO5 gene and growth changes that parallel deletion of ada2. Microarray analyses further revealed that ada2-RLR alters expression of a subset of those genes affected by deletion of ada2. Indicative of Ada2-RLR affecting Gcn5 function, Ada2-RLR resulted in a decrease in Gcn5-mediated histone acetylation in vitro to a level approximately 40% that with wild-type Ada2. In addition, in vivo acetylation of K16 of histone H2B was almost totally eliminated at Ada2-regulated promoters in the ada2-RLR strain, while acetylation of K9 and K18 of histone H3 was reduced to approximately 40% of wild-type levels. We also show that the central region of Ada2 interacts with phospholipids. Since phosphatidylserine binding paralleled Ada2 function, we suggest that lipid binding may play a role in the function or regulation of the SAGA complex.