We have isolated an extragenic suppressor, FAM1-1, which is able to restore respiratory growth to a deletion of the CEM1 gene (mitochondrial beta-keto-acyl synthase). The sequence of the suppressor strongly suggests that it encodes a long-chain fatty acid CoA ligase (fatty-acyl-CoA synthetase). We have also cloned and sequenced the wild-type FAM1 gene, which is devoid of suppressor activity. The comparison of the two sequences shows that the suppressor mutation is an A-->T transversion, which creates a new initiation codon and adds 18 amino acids to the N-terminus of the protein. This extension has all the characteristics of a mitochondrial targeting sequence, whilst the N-terminus of the wild-type protein has none of these characteristics. In vitro mitochondrial import experiments show that the N-terminal half of the suppressor protein, but not of the wild-type, is transported into mitochondria. Thus, we hypothesize that the suppressor acts by changing the subcellular localization of the protein and relocating at least some of the enzyme from the cytosol to the mitochondria. These results support the hypothesis that some form of fatty acid synthesis, specific for the mitochondria, is essential for the function of the organelle.