Erwinia amylovora, the bacterium responsible for fire blight, relies on a type III secretion system and a single injected effector, DspA/E, to induce disease in host plants. DspA/E belongs to the widespread AvrE family of type III effectors that suppress plant defense responses and promote bacterial growth following infection. Ectopic expression of DspA/E in plant or in Saccharomyces cerevisiae is toxic, indicating that DspA/E likely targets a cellular process conserved between yeast and plant. To unravel the mode of action of DspA/E, we screened the Euroscarf S. cerevisiae library for mutants resistant to DspA/E-induced growth arrest. The most resistant mutants (Delta sur4,Delta fen1,Delta ipt1,Delta skn1,Delta csg1, Delta csg2,Delta orm1, and Delta orm2) were impaired in the sphingolipid biosynthetic pathway. Exogenously supplied sphingolipid precursors such as the long chain bases (LCBs) phytosphingosine and dihydrosphingosine also suppressed the DspA/E-induced yeast growth defect. Expression of DspA/E in yeast down-regulated LCB biosynthesis and induced a rapid decrease in LCB levels, indicating that serine palmitoyltransferase (SPT), the first and rate-limiting enzyme of the sphingolipid biosynthetic pathway, was repressed. SPT down-regulation was mediated by dephosphorylation and activation of Orm proteins that negatively regulate SPT. A Delta cdc55 mutation affecting Cdc55-PP2A protein phosphatase activity prevented Orm dephosphorylation and suppressed DspA/E-induced growth arrest.