Protein prenylation occurs by modification of proteins with one of at least two isoprenoids, the farnesyl group and the geranylgeranyl group. Protein farnesyltransferases have been identified, but no such enzyme has been identified for geranylgeranylation. We report the identification of an activity in crude soluble yeast extracts that catalyzes the transfer of a geranylgeranyl moiety from geranylgeranyl pyrophosphate to proteins having the C-terminal sequence Cys-Ile-Ile-Leu or Cys-Val-Leu-Leu but not to a similar protein ending with Cys-Ile-Ile-Ser. This activity is dependent upon the CDC43/CAL1 gene, which is involved in budding and the control of cell polarity, but does not require the DPR1/RAM1 gene, which is known to be required for the farnesylation of Ras proteins. These results indicate that the protein geranylgeranyltransferase activity is distinct from the protein farnesyltransferase activity and that its specificity depends in part on the extreme C-terminal leucine in the protein to be prenylated.