Indole-3-acetic acid (IAA) is the most common, naturally occurring phytohormone that regulates cell division, differentiation, and senescence in plants. The capacity to synthesize IAA is also widespread among plant-associated bacterial and fungal species, which may use IAA as an effector molecule to define their relationships with plants or to coordinate their physiological behavior through cell-cell communication. Fungi, including many species that do not entertain a plant-associated life style, are also able to synthesize IAA, but the physiological role of IAA in these fungi has largely remained enigmatic. Interestingly, in this context, growth of the budding yeast Saccharomyces cerevisiae is sensitive to extracellular IAA. Here, we use a combination of various genetic approaches including chemical-genetic profiling, SAturated Transposon Analysis in Yeast (SATAY), and genetic epistasis analyses to identify the mode-of-action by which IAA inhibits growth in yeast. Surprisingly, these analyses pinpointed the target of rapamycin complex 1 (TORC1), a central regulator of eukaryotic cell growth, as the major growth-limiting target of IAA. Our biochemical analyses further demonstrate that IAA inhibits TORC1 both in vivo and in vitro. Intriguingly, we also show that yeast cells are able to synthesize IAA and specifically accumulate IAA upon entry into stationary phase. Our data therefore suggest that IAA contributes to proper entry of yeast cells into a quiescent state by acting as a metabolic inhibitor of TORC1.