In Saccharomyces cerevisiae, the low molecular weight acyl carrier protein (ACP) of mitochondrial type II fatty acid synthase (FAS) and the cytoplasmic type I FAS multienzyme contain 4'-phosphopantetheine as a prosthetic group. Sequence alignment studies with the recently isolated phosphopantetheine:protein transferase (PPTase), Ppt1p, from Brevibacterium ammoniagenes revealed the yeast open reading frame, YPL148C, as a potential PPTase gene (25% identical and 43% conserved amino acids). In accordance with this similarity, pantetheinylation of mitochondrial ACP was lost upon disruption of YPL148C. In contrast, biosynthesis of cytoplasmic holo-FAS remained unaffected by this mutation. According to these characteristics, the newly identified gene was designated as PPT2. Similar to ACP null mutants, cellular lipoic acid synthesis and, hence, respiration were abolished in PPT2 deletants. ACP pantetheinylation, lipoic acid synthesis, and respiratory competence were restored upon transformation of PPT2 mutants with cloned PPT2 DNA. In vitro, holo-ACP synthesis was achieved by incubating apo-ACP with coenzyme A in the presence of purified Ppt2p. The homologous yeast enzyme could be replaced, in this assay, by the ACP synthase (EC 2.7.8.7) of Escherichia coli but not by the type I FAS-specific PPTase of B. ammoniagenes, Ppt1p. These results conform with the inability of Ppt2p to activate the cytoplasmic type I FAS complex of yeast.