Alcohol dehydrogenase isoenzyme III (ADH III) in Saccharomyces cerevisiae, the product of the ADH3 gene, is located in the mitochondrial matrix. The ADH III protein was synthesized as a larger precursor in vitro when the gene was transcribed with the SP6 promoter and translated with a reticulocyte lysate. A precursor of the same size was detected when radioactively pulse-labeled proteins were immunoprecipitated with anti-ADH antibody. This precursor was rapidly processed to the mature form in vivo with a half-time of less than 3 min. The processing was blocked if the mitochondria were uncoupled with carbonyl cyanide m-chlorophenylhydrazone. Mutant enzymes in which only the amino-terminal 14 or 16 amino acids of the presequence were retained were correctly targeted and imported into the matrix. A mutant enzyme that was missing the amino-terminal 17 amino acids of the presequence produced an active enzyme, but the majority of the enzyme activity remained in the cytoplasmic compartment on cellular fractionation. Random amino acid changes were produced in the wild-type presequence by bisulfite mutagenesis of the ADH3 gene. The resulting ADH III protein was targeted to the mitochondria and imported into the matrix in all of the mutants tested, as judged by enzyme activity. Mutants containing amino acid changes in the carboxyl-proximal half of the ADH3 presequence were imported and processed to the mature form at a slower rate than the wild type, as judged by pulse-chase studies in vivo. The unprocessed precursor appeared to be unstable in vivo. It was concluded that only a small portion of the presequence contains the necessary information for correct targeting and import. Furthermore, the information for correct proteolytic processing of the presequence appears to be distinct from the targeting information and may involve secondary structure information in the presequence.