Genetic studies in Saccharomyces cerevisiae identified two genes, STE24 and RCE1, involved in cleaving the three carboxyl-terminal amino acids from isoprenylated proteins that terminate with a CAAX sequence motif. Ste24p cleaves the carboxyl-terminal "-AAX" from the yeast mating pheromone a-factor, whereas Rce1p cleaves the -AAX from both a-factor and Ras2p. Ste24p also cleaves the amino terminus of a-factor. The mouse genome contains orthologues for both yeast RCE1 and STE24. We previously demonstrated, with a gene-knockout experiment, that mouse Rce1 is essential for development and that Rce1 is entirely responsible for the carboxyl-terminal proteolytic processing of the mouse Ras proteins. In this study, we cloned mouse Zmpste24, the orthologue for yeast STE24 and showed that it could promote a-factor production when expressed in yeast. Then, to assess the importance of Zmpste24 in development, we generated Zmpste24-deficient mice. Unlike the Rce1 knockout mice, Zmpste24-deficient mice survived development and were fertile. Since no natural substrates for mammalian Zmpste24 have been identified, yeast a-factor was used as a surrogate substrate to investigate the biochemical activities in membranes from the cells and tissues of Zmpste24-deficient mice. We demonstrate that Zmpste24-deficient mouse membranes, like Ste24p-deficient yeast membranes, have diminished CAAX proteolytic activity and lack the ability to cleave the amino terminus of the a-factor precursor. Thus, both enzymatic activities of yeast Ste24p are conserved in mouse Zmpste24, but these enzymatic activities are not essential for mouse development or for fertility.