Yeast chitin synthase III (CSIII) is targeted to the bud neck, where it is thought to be tethered by the septin-associated protein Bni4. Bni4 also associates with the yeast protein phosphatase (PP1) catalytic subunit, Glc7. To identify regions of Bni4 necessary for its targeting functions, we created a collection of 23 deletion mutants throughout the length of Bni4. Among the deletion variants that retain the ability to associate with the bud neck, only those deficient in Glc7 binding fail to target CSIII to the neck. A chimeric protein composed of the septin Cdc10 and the C-terminal Glc7-binding domain of Bni4 complements the defects of a bni4Δ mutant, indicating that the C-terminus of Bni4 is necessary and sufficient to target Glc7 and CSIII to the bud neck. A Cdc10-Glc7 chimera fails to target CSIII to the bud neck but is functional in the presence of the C-terminal Glc7-binding domain of Bni4. The conserved C-terminal PP1-binding domain of mammalian Phactr-1 can functionally substitute for the C-terminus of Bni4. These results suggest that the essential role of Bni4 is to target Glc7 to the neck and activate it toward substrates necessary for CSIII recruitment and synthesis of chitin at the bud neck.