Polarization of the plasma membrane (PM) into domains is an important mechanism to compartmentalize cellular activities and to establish cell polarity. Polarization requires formation of diffusion barriers that prevent mixing of proteins between domains. Recent studies have uncovered that the endoplasmic reticulum (ER) of budding yeast and neurons is polarized by diffusion barriers, which in neurons controls glutamate signaling in dendritic spines. The molecular identity of these barriers is currently unknown. Here, we show that a direct interaction between the ER protein Scs2 and the septin Shs1 creates the ER diffusion barrier in yeast. Barrier formation requires Epo1, a novel ER-associated subunit of the polarisome that interacts with Scs2 and Shs1. ER-septin tethering polarizes the ER into separate mother and bud domains, one function of which is to position the spindle in the mother until M phase by confining the spindle capture protein Num1 to the mother ER.