Aureobasidins are cyclic depsipeptide natural products that have been shown to be fungicidal against a wide variety of fungi. We have studied the effect of an aureobasidin-like compound, SCH 56301 on the morphology and cytology of yeast cells. For both, Candida albicans and Saccharomyces cerevisiae, the normal cell cycle is disrupted by sub-lethal concentrations of the compound. In Saccharomyces, cells accumulate at the G2/M border of the cell cycle, DNA replication is essentially complete and a short nuclear spindle is visible; however, nuclear migration and spindle elongation do not occur and consequently a small round daughter cell remains attached to the mother cell. Changes in cell wall morphology are visible at old bud scars remaining on mother cells. Under the conditions of preparation of the specimens, there may have been insufficient cross-linking during treatment with SCH 56301 so that intracellular pressure appears to be pushing on a weakened cell wall at these points.