EDIT: Thanks everyone, problem solved.

 

And my timing belt was replaced at 70,000 miles. That's the first thing the mechanic said he checked and it was fine.

 

Sounds like you need a new mechanic.

If there is no compression(I guess that is what you mean), it would most likely be on one or two cylinders, and be a ring or valve problem. If it turns over when you turn the key, and does not make any bad noises(from twisted metal scraping on other metal), I would be surprised if your mechanic is telling you the truth. It is relatively straightforward to check out the ignition system, you should probably do this,

 

I had a simualr problem with my Del Sol, it just died, it would turn over all day but would not refire. I replaced the Ignition Control Module and it fired right up.

 

compression is somthing that goes down slowly. if u noticed ur car lacking alot of power lately, giving you really bad gas milage. but if your car is 100%, then all of a sudden it doesnt run, i highly doubt its your compression.

get a second opinion before u fork out 1500 for an engine

 

Agreed. My bf had a similar problem in his 300zx. Turned out to be a bent valve. If you can handle the mechanical work, valves aren't too expensive.

 

Thanks for all the great info guys. I had him check the ignition and he couldn't find anything wrong. I'm getting a 2nd opinion from the dealership. I'll be having it towed there tomorrow and give you guys an update on the situation.

 

Go to a few other places and have them take a look at it if you can.