The Saccharomyces cerevisiae mating pheromone a-factor is a prenylated and carboxyl methylated extracellular peptide signaling molecule. Biogenesis of the a-factor precursor proceeds via a distinctive multistep pathway that involves COOH-terminal modification, NH2-terminal proteolysis, and a nonclassical export mechanism. In this study, we examine the formation and fate of a-factor biosynthetic intermediates to more precisely define the events that occur during a-factor biogenesis. We have identified four distinct a-factor biosynthetic intermediates (P0, P1, P2, and M) by metabolic labeling, immunoprecipitation, and SDSPAGE. We determined the biochemical composition of each by defining their NH2-terminal amino acid and COOH-terminal modification status. Unexpectedly, we discovered that not one, but two NH2-terminal cleavage steps occur during the biogenesis of a-factor. In addition, we have shown that COOH-terminal prenylation is required for the NH2-terminal processing of a-factor and that all the prenylated a-factor intermediates (P1, P2, and M) are membrane bound, suggesting that many steps of a-factor biogenesis occur in association with membranes. We also observed that although the biogenesis of a-factor is a rapid process, it is inherently inefficient, perhaps reflecting the potential for regulation. Previous studies have identified gene products that participate in the COOH-terminal modification (Ram1p, Ram2p, Ste14p), NH2-terminal processing (Ste24p, Axl1p), and export (Ste6p) of a-factor. The intermediates defined in the present study are discussed in the context of these biogenesis components to formulate an overall model for the pathway of a-factor biogenesis.