Membrane fusion at the vacuole depends on a conserved machinery that includes SNAREs, the Rab7 homolog Ypt7 and its effector HOPS. Here, we demonstrate that Ypt7 has an unexpected additional function by controlling membrane homeostasis and nutrient-dependent signaling on the vacuole surface. We show that Ivy1, the yeast homolog of mammalian missing-in-metastasis (MIM), is a vacuolar effector of Ypt7-GTP and interacts with the EGO/ragulator complex, an activator of the target of rapamycin kinase complex 1 (TORC1) on vacuoles. Loss of Ivy1 does not affect EGO vacuolar localization and function. In combination with the deletion of individual subunits of the V-ATPase, however, we observed reduced TORC1 activity and massive enlargement of the vacuole surface. Consistent with this, Ivy1 localizes to invaginations at the vacuole surface and on liposomes in a phosphoinositide- and Ypt7-GTP-controlled manner, which suggests a role in microautophagy. Our data, thus, reveal that Ivy1 is a novel regulator of vacuole membrane homeostasis with connections to TORC1 signaling.