Ras proteins are small membrane-associated GTP binding proteins that cycle between active (GTP-bound) and inactive (GDP-bound) states to regulate cell growth and differentiation. In Saccharomyces cerevisiae, two Ras proteins (Ras1 and Ras2) affect such diverse processes as vegetative growth, sporulation, carbon source utilization, stress response, and pseudohyphal growth (12,25,45,61,64). Ras-dependent growth requires plasma membrane localization, which in turn depends on a series of posttranslational modifications that occur on a carboxyl-terminal CaaX box (C is cysteine, a is any aliphatic residue, X is the carboxy-terminal residue) (15,20,21,57). The first step is the farnesylation of the CaaX box cysteine by a soluble, heterodimer farnesyl protein transferase encoded by the RAM1 and RAM2 genes in yeast (34,39,53). The aaX sequence is removed by one of two endoplasmic reticulum (ER)-associated proteases encoded by RCE1 and AFC1/STE24 (9, 58). The newly exposed cysteinyl ␣-carboxyl is then methyl esterified by the product of STE14, an integral membrane protein which also colocalizes with the ER in yeast and mammalian cells (16,18,22,54,56).The mature form of Ras is localized primarily on the cytoplasmic surface of the plasma membrane. Mutations in either the CaaX box or the genes encoding the posttranslational modification enzymes cause a reduction in Ras plasma membrane localization and a corresponding reduction in the ability of Ras to support growth (15, 57). However, the mechanism by which prenylation and subsequent posttranslational modifications direct Ras proteins to the plasma membrane is not known. It is clear that prenylation alone is not sufficient for efficient plasma membrane targeting of Ras. Yeast mutants that fail to carry out the palmitoylation step have reduced amounts of Ras protein at the plasma membrane and increased resistance to heat shock in the presence of activated Ras2(V19) alleles (6). Palmitoylation, unlike the CaaX processing steps, is reversible, making it a likely regulatory step. Interestingly, oncogenic forms of Ras are also rendered nontransforming by mutating the palmitoylation sites (69). Unfortunately, palmitoylation is the least well understood step in the Ras posttranslational modification pathway. A major obstacle has been the failure to identify a protein palmitoyltransferase, although reports of partial purification of palmitoyltransferase activities have appeared (3,19,37). The matter is further complicated by the fact that protein palmitoylation can occur nonenzymatically; however, the reaction rate is considerably lower than that observed in vivo (1,23,66). The issue is unlikely to be resolved until there is a better understanding of the requirements for and biological consequences of palmitoylation in vivo.The multistep nature of Ras modification suggests that subcellular targeting may be an ordered process involving distinct intracellular membrane compartments. In support of this idea is the recent demonstration that the -aaX proteases (Afc1 and Rce1) and methylt...