The Saccharomyces cerevisiae mutant ref2-1 (REF = RNA end formation) was originally identified by a genetic strategy predicted to detect decreases in the use of a CYC1 poly(A) site interposed within the intron of an ACT1-HIS4 fusion reporter gene. Direct RNA analysis now proves this effect and also demonstrates the trans action of the REF2 gene product on cryptic poly(A) sites located within the coding region of a plasmid-borne ACT1-lacZ gene. Despite impaired growth of ref2 strains, possibly because of a general defect in the efficiency of mRNA 3'-end processing, the steady-state characteristics of a variety of normal cellular mRNAs remain unaffected. Sequencing of the complementing gene predicts the Ref2p product to be a novel, basic protein of 429 amino acids (M(r), 48,000) with a high-level lysine/serine content and some unusual features. Analysis in vitro, with a number of defined RNA substrates, confirms that efficient use of weak poly(A) sites requires Ref2p: endonucleolytic cleavage is carried out accurately but at significantly lower rates in extracts prepared from delta ref2 cells. The addition of purified, epitope-tagged Ref2p (Ref2pF) reestablishes wild-type levels of activity in these extracts, demonstrating direct involvement of this protein in the cleavage step of 3' mRNA processing. Together with the RNA-binding characteristics of Ref2pF in vitro, our results support an important contributing role for the REF2 locus in 3'-end processing. As the first gene genetically identified to participate in mRNA 3'-end maturation prior to the final polyadenylation step, REF2 provides an ideal starting point for identifying related genes in this event.