ADP-ribosylation factors (ARFs) are highly conserved, approximately 20-kDa guanine nucleotide-binding proteins that enhance the ADP-ribosyltransferase activity of cholera toxin and have an important role in vesicular transport. Several cDNAs for ARF-like proteins (ARLs) have been cloned from human, Drosophila, rat, and yeast, although the biological function(s) of ARLs is unknown. We have identified a yeast gene (yARL3) encoding a protein that is structurally related (>43% identical) to the mammalian ARF-like protein ARP. Biochemical studies of purified recombinant yARL3 protein revealed properties similar to those of ARF and ARL proteins, including the ability to bind and hydrolyze GTP. Like other ARLs, recombinant yARL3 did not stimulate cholera toxin-catalyzed auto-ADP-ribosylation. Anti-yARL3 antibodies did not cross-react with yARFs or yARL1. yARL3 was not essential for cell viability, but disruption of yARL3 resulted in cold-sensitive cell growth. At the nonpermissive temperature, processing of alkaline phosphatase and carboxypeptidase Y in arl3 mutant was slowed. yARL3 might be required for protein transport from endoplasmic reticulum to Golgi or from Golgi to vacuole at nonpermissive temperatures. On subcellular fractionation, unlike its mammalian homologue ARP, yARL3 was detected in the soluble fraction but not in the plasma membrane. Indirect immunofluorescence analysis revealed that yARL3 when overexpressed was associated in part with the endoplasmic reticulum-nuclear envelope. Thus, the structural and functional characteristics of yARL3 indicate that it may have a unique role(s) in vesicular trafficking.