The association of F-actin (filamentous actin) with a large number of binding proteins is essential for cellular function. Actin-binding proteins control the dynamics of actin filaments, nucleate new filaments and facilitate formation of higher-order structures such as actin bundles. The yeast gene SCP1 encodes a small protein with significant homology to mammalian SM22/transgelin. We have investigated the role of Scp1p in budding yeast to probe the fundamental role of this family of proteins. Here, we demonstrate that Scp1p binds to F-actin and induces the formation of tight F-actin bundles in vitro. Deletion of SCP1 in yeast lacking the actin-bundling protein, fimbrin (Sac6p), exacerbates the disrupted actin phenotype and enhances latrunculin-A sensitivity. Furthermore, Scp1p co-localizes with actin in cortical patches and its localization is lost in the presence of latrunculin-A. Our data support a role for Scp1p in bundling actin filaments and, in concert with Sac6p, acting as a second actin-bundling activity crucial to the stability of the yeast actin cytoskeleton.