For protein synthesis initiation in eukaryotes, eIF2B is the guanine-nucleotide exchange factor for eIF2. eIF2B is an essential multi-subunit factor and a major target for translational control in both yeast and mammalian cells. It was shown previously that the largest eIF2B subunit, eIF2Bepsilon, is the only single subunit with catalytic function. Here we report the results of a molecular dissection of the yeast epsilon subunit encoded by GCD6 in which we have identified the catalytic domain. By analysis of a series of N-terminal deletions in vitro we find that the smallest catalytically active fragment contains residues 518-712 (termed Gcd6p(518-712)). Further deletion to position 581 (Gcd6p(581-712)) results in loss of nucleotide exchange function, but eIF2-binding activity is retained. C- terminal deletion of only 61 residues (Gcd6p(1-651)) results in loss of both functions. Thus Gcd6p(518-712) contains two regions that together constitute the catalytic domain of eIF2B. Finally, we show that the catalytic domain can provide eIF2B biological function in vivo when elevated levels eIF2 and tRNA(i)(Met) are also present.