We have examined the cellular function of Sgs1p, a nonessential yeast DNA helicase, homologs of which are implicated in two highly debilitating hereditary human diseases (Werner's and Bloom's syndromes). We show that Sgs1p is an integral component of the S-phase checkpoint response in yeast, which arrests cells due to DNA damage or blocked fork progression during DNA replication. DNA polepsilon and Sgs1p are found in the same epistasis group and act upstream of Rad53p to signal cell cycle arrest when DNA replication is perturbed. Sgs1p is tightly regulated through the cell cycle, accumulates in S phase and colocalizes with Rad53p in S-phase-specific foci, even in the absence of fork arrest. The association of Rad53p with a chromatin subfraction is Sgs1p dependent, suggesting an important role for the helicase in the signal-transducing pathway that monitors replication fork progression.