The alpha and betagamma subunits of heterotrimeric G-proteins contain specific lipid modifications, which are required for their biological function. However, the relevance of these modifications to the interactions within the heterotrimeric G-protein is not fully understood. In order to explore the role of the S-prenyl moiety of the isoprenylated betagamma dimer of retinal transducin, betagamma(t), in the formation of the heterotrimeric complex with the corresponding N-acylated alpha subunit, alpha(t), we employed purified fully processed subunits, which are soluble in aqueous solutions without detergents. Pertussis-toxin-mediated [(32)P]ADP-ribosylation of alpha(t) is strongly stimulated (approximately 10-fold) in the presence of betagamma(t) and can thus serve as a measure for heterotrimer formation. Using this assay, preincubation of alpha(t) with S-prenyl analogues containing farnesyl or geranylgeranyl moieties was found to inhibit heterotrimer formation in a dose-dependent manner. The inhibition was competitive and reversible, as indicated by its reversal upon increase of the betagamma(t) dimer concentration or by removal of the S-prenyl analogue using gel filtration. The competitive nature of the inhibition is supported by the marked attenuation of the inhibition when the S-prenyl analogue was added to alpha(t) together with or after betagamma(t). The inhibition does not involve interaction with the alpha(t) acyl group, since an S-prenyl analogue inhibited the [(32)P]ADP-ribosylation of an unlipidated alpha(t) mutant. These data suggest the existence of a hitherto unrecognized S-prenyl-binding site in alpha(t), which is critical for its interaction with prenylated betagamma(t).