In eucaryotic cells signal sequences of secretory and membrane proteins are cleaved by the signal peptidase complex during their transport into the lumen of the endoplasmic reticulum. The signal peptidase complex in yeast consists of four subunits. To date, three of these subunits have been functionally characterized. One of them, the Sec11p, is essential for viability of yeast cells. It shows significant homology to the mammalian SPC18 and SPC21 as well as to bacterial leader peptidases. Two other subunits, Spc1p and Spc2p, have been shown to be homologous to mammalian SPC12 and SPC25, respectively, and are not essential for protein translocation or signal peptide cleavage. We have purified and analyzed the fourth subunit of yeast signal peptidase, Spc3p. The protein is essential for viability of yeast cells. Depletion of SPC3 leads to accumulation of precursors of secretory proteins in vivo and to the loss of the signal peptidase activity in vitro. Therefore, in contrast to the bacterial leader peptidases, yeast signal peptidase requires a second subunit for its function.