vps3 mutants of the yeast Saccharomyces cerevisiae are impaired in the sorting of newly synthesized soluble vacuolar proteins and in the acidification of the vacuole (Rothman, J. H., and T. H. Stevens. Cell. 47:1041-1051; Rothman, J. H., C. T. Yamashiro, C. K. Raymond, P. M. Kane, and T. H. Stevens. 1989. J. Cell Biol. 109:93-100). The VPS3 gene, which was cloned using a novel selection procedure, encodes a low abundance, hydrophilic protein of 117 kD that most likely resides in the cytoplasm. Yeast strains bearing a deletion of the VPS3 gene (vps3-delta 1) are viable, yet their growth rate is significantly reduced relative to wild-type cells. Temperature shift experiments with strains carrying a temperature conditional vps3 allele demonstrate that cells rapidly lose the capacity to sort the vacuolar protein carboxypeptidase Y upon loss of VPS3 function. Vacuolar morphology was examined in wild-type and vps3-delta 1 yeast strains by fluorescence microscopy. The vacuoles in wild-type yeast cells are morphologically complex, and they appear to be actively partitioned between mother cells and buds during an early phase of bud growth. Vacuolar morphology in vps3-delta 1 mutants is significantly altered from the wild-type pattern, and the vacuolar segregation process seen in wild-type strains is defective in these mutants. With the exception of a vacuolar acidification defect, the phenotypes of vps3-delta 1 strains are significantly different from those of mutants lacking the vacuolar proton-translocating ATPase. These data demonstrate that the acidification defect in vps3-delta 1 cells is not the primary cause of the pleiotropic defects in vacuolar function observed in these mutants.