It is a well known phenomenon that the occurrence of several distinct amino acids at the C-terminus of proteins is non-random. We have analysed all Saccharomyces cerevisiae proteins predicted by computer databases and found lysine to be the most frequent residue both at the last (-1) and at the penultimate amino acid (-2) positions. To test the hypothesis that C-terminal basic residues efficiently bind to phospholipids we randomly expressed GST-fusion proteins from a yeast genomic library. Fifty-four different peptide fragments were found to bind phospholipids and 40% of them contained lysine/arginine residues at the (-1) or (-2) positions. One peptide showed high sequence similarity with the yeast protein Sip18p. Mutational analysis revealed that both C-terminal lysine residues of Sip18p are essential for phospholipid-binding in vitro. We assume that basic amino acid residues at the (-1) and (-2) positions in C-termini are suitable to attach the C-terminus of a given protein to membrane components such as phospholipids, thereby stabilizing the spatial structure of the protein or contributing to its subcellular localization. This mechanism could be an additional explanation for the C-terminal amino acid bias observed in proteins of several species.