Mutations in the CWH8 gene, which encodes an ER transmembrane protein with a phosphate binding pocket in Saccharomyces cerevisiae, result in a deficiency in dolichyl pyrophosphate (Dol-P-P)-linked oligosaccharide intermediate synthesis and protein N-glycosylation (van Berkel, M. A., Rieger, M., te Heesen, S., Ram, A. F., van den Ende, H., Aebi, M., and Klis, F. M. (1999) Glycobiology 9, 243-253). Genetic, enzymological, and topological approaches were taken to investigate the potential role of Cwh8p in Dol-P-P/Dol-P metabolism. Overexpression of Cwh8p in the yeast double mutant strain, lacking LPP1/ DPP1, resulted in an impressive increase in Dol-P-P phosphatase activity, a relatively small increase in Dol-P phosphatase activity, but no change in phosphatidate (PA) phosphatase activity in microsomal fractions. The Dol-P-P phosphatase encoded by CWH8 is optimally active in the presence of 0.5% octyl glucoside and relatively unstable in Triton X-100, distinguishing this activity from the lipid phosphatases encoded by LPP1 and DPP1. Stoichiometric amounts of P i and Dol-P are formed during the enzymatic reaction indicating that Cwh8p cleaves the anhydride linkage in Dol-P-P. Membrane fractions from Sf-9 cells expressing Cwh8p contained a 30-fold higher level of Dol-P-P phosphatase activity, a slight increase in Dol-P phosphatase activity, but no increase in PA phosphatase relative to controls. This is the first report of a lipid phosphatase that hydrolyzes Dol-P-P/Dol-P but not PA. In accord with this enzymatic function, Dol-P-P accumulated in cells lacking the Dol-P-P phosphatase. Topological studies using different approaches indicate that Cwh8p is a transmembrane protein with a luminally oriented active site. The specificity, subcellular location, and topological orientation of this novel enzyme are consistent with a role in the re-utilization of the glycosyl carrier lipid for additional rounds of lipid intermediate biosynthesis after its release during protein N-glycosylation reactions.Although the biosynthesis of dolichyl-linked saccharide intermediates is initiated on the cytoplasmic side of the endoplasmic reticulum (ER), 1 dolichyl pyrophosphate (Dol-P-P) and several dolichyl monophosphate (Dol-P) molecules are released on the luminal surface during protein N-glycosylation reactions, glycosylphosphatidylinositol anchor synthesis, C-and O-mannosylation of proteins (see reviews in Refs. 1-3). For the dolichyl moiety of Dol-P-P to be re-utilized for additional rounds of lipid intermediate biosynthesis, it must be converted to Dol-P before or after returning to the cytoplasmic leaflet of the ER.There have been many reports of Dol-P-P phosphatase activities in microsomal fractions from mammalian tissues (see reports cited in Ref.3). However, the subcellular location and topological arrangement of the active sites of these enzymes have not been definitively established. A Dol-P-P phosphatase activity reported in brain (4) is curiously enriched in Golgi fractions and is an unlikely candidate to be involved in the ...