Using small molecule probes to understand gene function is an attractive approach that allows functional characterization of genes that are dispensable in standard laboratory conditions and provides insight into the mode of action of these compounds. Using chemogenomic assays we previously identified yeast Crg1, an uncharacterized SAM-dependent methyltransferase, as a novel interactor of the protein phosphatase inhibitor cantharidin. In this study we used a combinatorial approach that exploits contemporary high-throughput techniques available in Saccharomyces cerevisiae combined with rigorous biological follow-up to characterize the interaction of Crg1 with cantharidin. Biochemical analysis of this enzyme followed by a systematic analysis of the interactome and lipidome of CRG1 mutants revealed that Crg1, a stress-responsive SAM-dependent methyltransferase, methylates cantharidin in vitro. Chemogenomic assays uncovered that lipid-related processes are essential for cantharidin resistance in cells sensitized by deletion of the CRG1 gene. Lipidome-wide analysis of mutants further showed that cantharidin induces alterations in glycerophospholipid and sphingolipid abundance in a Crg1-dependent manner. We propose that Crg1 is a small molecule methyltransferase important for maintaining lipid homeostasis in response to drug perturbation. This approach demonstrates the value of combining chemical genomics with other systems-based methods for characterizing proteins and elucidating previously unknown mechanisms of action of small molecule inhibitors.