Kex2 protease (Kex2p) and Ste13 dipeptidyl aminopeptidase (Ste13p) are required in Saccharomyces cerevisiae for maturation of the alpha-mating factor in a late Golgi compartment, most likely the yeast trans-Golgi network (TGN). Previous studies identified a TGN localization signal (TLS) in the C-terminal cytosolic tail of Kex2p consisting of Tyr-713 and contextual sequences. Further analysis of the Kex2p TLS revealed similarity to the Ste13p TLS. Mutation of the Kex2p TLS results in transport of Kex2p to the vacuole by default. When expression of a GAL1 promoter-driven KEX2 gene is shut off in MAT(alpha) cells, the TGN becomes depleted of Kex2p, resulting in a gradual decline in mating competence which is greatly accelerated by TLS mutations. To identify the genes involved in localization of Kex2p, we isolated second-site suppressors of the rapid loss of mating competence observed upon shutting off expression of a TLS mutant form of Kex2p (Y713A). Seven of 58 suppressors were allele specific, suppressing point mutations at Tyr-713 but not deletions of the TLS or entire C-terminal cytosolic tail. By linkage analysis, the allele-specific suppressors defined three genetic loci, SOI1, S0I2, and S0I3. Pulse-chase analysis demonstrated that these suppressors increased net TGN retention of both Y713A Kex2p and a Ste13p-Pho8p fusion protein containing a point mutation in the Ste13p TLS. SOI1 suppressor alleles reduced the efficiency of localization of wild-type Kex2p to the TGN, implying an impaired ability to discriminate between the normal TLS and a mutant TLS. soi1 mutants also exhibited a recessive defect in vacuolar protein sorting. Suppressor alleles of S0I2 were dominant. These results suggest that the SOI1 and S0I2 genes encode regulators or components of the TLS recognition machinery.