We demonstrate the pathway for the biosynthesis of RAS1 and RAS2 gene products of Saccharomyces cerevisiae leading to their localization in membranes. The primary translation products of these genes are detected in a soluble fraction. Shortly after synthesis, these precursor molecules are converted to forms that migrate slightly faster than the precursor forms on a NaDodSO4/polyacrylamide gel. These processed proteins are further modified by fatty acid acylation, which is detected by [3H]palmitic acid labeling. The acylated derivatives are found exclusively in cell membranes, indicating the translocation of the RAS proteins from cytosol to membranes during maturation process. The attached fatty acids can be released by mild alkaline hydrolysis, suggesting that the linkage between the fatty acid and the protein is an ester bond. The site of the modification by fatty acid is presumably localized to the COOH-terminal portion of the RAS proteins. Fractionation of the membranes by sucrose gradient demonstrates that a majority of the fatty-acylated RAS proteins are localized in plasma membrane.