A gene from Saccharomyces cerevisiae has been mapped, cloned, sequenced and shown to encode a catalytic subunit of an N‐terminal acetyltransferase. Regions of this gene, NAT1, and the chloramphenicol acetyltransferase genes of bacteria have limited but significant homology. A nat1 null mutant is viable but exhibits a variety of phenotypes, including reduced acetyltransferase activity, derepression of a silent mating type locus (HML) and failure to enter G0. All these phenotypes are identical to those of a previously characterized mutant, ard1. NAT1 and ARD1 are distinct genes that encode proteins with no obvious similarity. Concomitant overexpression of both NAT1 and ARD1 in yeast causes a 20‐fold increase in acetyltransferase activity in vitro, whereas overexpression of either NAT1 or ARD1 alone does not raise activity over basal levels. A functional iso‐1‐cytochrome c protein, which is N‐terminally acetylated in a NAT1 strain, is not acetylated in an isogenic nat1 mutant. At least 20 other yeast proteins, including histone H2B, are not N‐terminally acetylated in either nat1 or ard1 mutants. These results suggest that NAT1 and ARD1 proteins function together to catalyze the N‐terminal acetylation of a subset of yeast proteins.