The kinetochore is a complex, multi-protein structure required for proper chromosome segregation in all eukaryotes. The Saccharomyces cerevisiae kinetochore consists of over 65 known proteins which work in concert to facilitate equal distribution of the replicated genome. The S. cerevisiae CenH3 histone variant Cse4 is an evolutionarily conserved histone H3-like inner kinetochore protein that is essential for kinetochore function. Through immunopurification of Cse4 interacting proteins we have identified the previously uncharacterized protein Scm3. Here we report the characterization of S. cerevisiae Scm3, an essential protein with putative orthologs in fungi which possess either point or regional centromeres. We find that Scm3 localizes to all budding yeast centromeres. Construction of a conditional allele of SCM3 has allowed us to characterize the phenotype of cells lacking Scm3. Scm3 depleted cells fail to properly localize the components of the inner kinetochore, including Cse4 and Ndc10, and arrest in metaphase with duplicated spindle poles, short spindles, and unequal DNA distribution in the daughter cells. Our data suggest that Scm3 is not an actual component of the centromeric nucleosome, but rather intimately associates with it. Additional in vivo and in vitro analysis of Cse4 reveals a single centromeric nucleosome that contains an octamer of Cse4, H2A, H2B, and H4. Based on these findings, we hypothesize that Scm3 is a novel yeast inner kinetochore protein that functions in the formation and maintenance of a segregation competent kinetochore through recruitment of the Cse4 octameric nucleosome.