Protein prenyltransferases catalyze the covalent attachment of isoprenoid lipids (farnesyl or geranylgeranyl) to a cysteine near the C terminus of their substrates. This study explored the specificity determinants for interactions between the farnesyltransferase of Saccharomyces cerevisiae and its protein substrates. A series of substitutions at amino acid 149 of the farnesyltransferase beta-subunit were tested in combination with a series of substitutions at the C-terminal amino acid of CaaX protein substrates Ras2p and a-factor. Efficient prenylation was observed when oppositely charged amino acids were present at amino acid 149 of the yeast farnesyltransferase beta-subunit and the C-terminal amino acid of the CaaX protein substrate, but not when like charges were present at these positions. This evidence for electrostatic interaction between amino acid 149 and the C-terminal amino acid of CaaX protein substrates leads to the prediction that the C-terminal amino acid of the protein substrate binds near amino acid 149 of the yeast farnesyltransferase beta-subunit.