Glutathione (GSH), L-gamma-glutamyl-L-cysteinyl-glycine, is the major low-molecular-weight thiol compound present in almost all eukaryotic cells. GSH degradation proceeds through the gamma-glutamyl cycle that is initiated, in all organisms, by the action of gamma-glutamyl transpeptidase. A novel pathway for the degradation of GSH that requires the participation of three previously uncharacterized genes is described in the yeast Saccharomyces cerevisiae. These genes have been named DUG1 (YFR044c), DUG2 (YBR281c), and DUG3 (YNL191w) (defective in utilization of glutathione). Although dipeptides and tripeptides with a normal peptide bond such as cys-gly or glu-cys-gly required the presence of only a functional DUG1 gene that encoded a protein belonging to the M20A metallohydrolase family, the presence of an unusual peptide bond such as in the dipeptide, gamma-glu-cys, or in GSH, required the participation of the DUG2 and DUG3 gene products as well. The DUG2 gene encodes a protein with a peptidase domain and a large WD40 repeat region, while the DUG3 gene encoded a protein with a glutamine amidotransferase domain. The Dug1p, Dug2p, and Dug3p proteins were found to form a degradosomal complex through Dug1p-Dug2p and Dug2p-Dug3p interactions. A model is proposed for the functioning of the Dug1p/Dug2p/Dug3p proteins as a specific GSH degradosomal complex.