The malate dehydrogenase isozyme MDH3 of Saccharomyces cerevisiae was found to be localized to peroxisomes by cellular fractionation and density gradient centrifugation. However, unlike other yeast peroxisomal enzymes that function in the glyoxylate pathway, MDH3 was found to be refractory to catabolite inactivation, i.e. to rapid inactivation and degradation following glucose addition. To examine the structural requirements for organellar localization, the Ser-Lys-Leu carboxyl-terminal tripeptide, a common motif for localization of peroxisomal proteins, was removed by mutagenesis of the MDH3 gene. This resulted in cytosolic localization of MDH3 in yeast transformants. To examine structural requirements for catabolite inactivation, a 12-residue amino-terminal extension from the yeast cytosolic MDH2 isozyme was added to the amino termini of the peroxisomal and mislocalized "cytosolic" forms of MDH3. This extension was previously shown to be essential for catabolite inactivation of MDH2 but failed to confer this property to MDH3. The mislocalized cytosolic forms of MDH3 were found to be catalytically active and competent for metabolic functions normally provided by MDH2.Differentially compartmentalized isozymes of malate dehydrogenase in eucaryotic cells catalyze the NAD(H)-dependent interconversion of oxaloacetate and malate. In mammalian cells this reaction, catalyzed by mitochondrial and cytosolic isozymes, respectively, is a critical step in the tricarboxylic acid cycle and in gluconeogenesis. The two isozymes also participate in the malate/aspartate shuttle cycle, a mechanism for exchange of reducing equivalents between cellular compartments. In yeast and plant cells, a third isozyme localized in peroxisomes catalyzes a step in the glyoxylate pathway. This pathway allows formation of C 4 metabolites from C 2 precursors. The malate dehydrogenase isozyme family is therefore an ideal focus for analysis of structural features responsible for differential compartmentation and metabolic function.To initiate molecular genetic studies, the three isozymes of malate dehydrogenase have been purified from Saccharomyces cerevisiae, and the corresponding genes have been cloned, sequenced, and disrupted (1-3). The isozymes are all homodimers, and they exhibit similar kinetic properties (3). The aligned amino acid sequences have residue identities ranging from 43 to 50%. Among conserved residues are those with catalytic functions or those that participate in cofactor binding (4, 5). Salient differences include regions with putative functions in organellar targeting. The yeast mitochondrial isozyme (MDH1, subunit molecular weight ϭ 33,500), for example, has a 17-residue amino-terminal extension not present on the other isozymes; this extension is removed upon mitochondrial import (6). The peroxisomal isozyme (MDH3, subunit molecular weight ϭ 37,200) has a unique carboxyl-terminal tripeptide sequence, Ser-Lys-Leu. Similar SKL termini on other peroxisomal proteins have been found to be necessary and sufficient for organellar lo...