The deposition of the polysaccharide chitin in the Saccharomyces cerevisiae cell wall is temporally and spatially regulated. Chitin synthase III (Chs3p) synthesizes a ring of chitin at the onset of bud emergence, marking the base of the incipient bud. At the end of mitosis, chitin synthase II (Chs2p) deposits a disk of chitin in the mother-bud neck, forming the primary division septum. Using indirect immunofluorescence microscopy, we have found that these two integral membrane proteins localize to the mother-bud neck at distinct times during the cell cycle. Chs2p is found at the neck at the end of mitosis, whereas Chs3p localizes to a ring on the surface of cells about to undergo bud emergence and in the mother-bud neck of small-budded cells. Cell synchronization and pulse-chase experiments suggest that the timing of Chs2p localization results from cell cycle-specific synthesis coupled to rapid degradation. Chs2p degradation depends on the vacuolar protease encoded by PEP4, indicating that Chs2p is destroyed in the vacuole. Temperature-sensitive mutations that block either the late secretory pathway (sec1-1) or the internalization step of endocytosis (end4-1) also prevent Chs2p degradation. In contrast, Chs3p is synthesized constitutively and is metabolically stable, indicating that Chs2p and Chs3p are subject to different modes of regulation. Differential centrifugation experiments show that a significant proportion of Chs3p resides in an internal compartment that may correspond to a vesicular species called the chitosome (Leal-Morales, C.A., C.E. Bracker, and S. Bartnicki-Garcia. 1988, Proc. Natl. Acad. Sci. USA. 85:8516-8520; Flores Martinez, A., and J. Schwencke. 1988. Biochim. Biophys. Acta. 946:328-336). Fractionation of membranes prepared from mutants defective in internalization (end3-1 and end4-1) indicate that the Chs3p-containing vesicles are endocytically derived. Collectively, these data suggest that the trafficking of Chs2p and Chs3p diverges after endocytosis; Chs3p is not delivered to the vacuole, but instead may be recycled.