Free oligosaccharides (fOS) are generated during glycoprotein biosynthesis in mammalian cells. Here we report on the origin and fate of these structures in the yeast Saccharomyces cerevisiae. After metabolic radiolabelling with [2-(3)H]mannose ([2-(3)H]Man) for 30 min, Man(8)GlcNAc(2) was identified as the predominant fOS in this organism, and radioactivity associated with this structure was found to correspond to approximately 1% of that associated with the same structure N -linked to glycoprotein. Despite provoking a fourfold increase in radioactivity associated with lipid-linked oligosaccharide, the protein-synthesis inhibitor cycloheximide blocked [2-(3)H]Man incorporation into both endo-beta-D- N -acetylglucosamine H-sensitive N-glycans and fOS. Peptide:N-glycanase, encoded by the PNG1 gene, was found to be required for the generation of a large proportion of yeast fOS during, and soon after, protein glycosylation. Use of an ams1 Delta strain deficient in the vacuolar alpha-mannosidase revealed this enzyme to be responsible for the slow growth-associated catabolism of fOS. The present paper constitutes the first description of fOS formation in intact S. cerevisiae, and, with the demonstration that fOS are degraded by the vacuolar mannosidase, a novel function for this poorly understood enzyme has been identified.