The DAL3 gene has been sequenced and found to encode a 195 amino acid protein with a molecular weight of 21,727. The four carboxy-terminal amino acids of DAL3 product (Cys-Ile-Ile-Ile) are homologous to those (CAAX) previously shown to be the primary structural signal for post-translational farnesylation of yeast RAS protein and mating factor. This modification is reported to be responsible for membrane localization of proteins containing it. The upstream region of DAL3 contains six copies of a sequence that is homologous to the positively acting DAL UASNTR reported to be required for transcriptional activation of the DAL5 and DAL7 genes. Missing from the DAL3 upstream region were any sequences related to those shown to be required for a DAL7 response to inducer, the UIS element. This correlates with the previous report that DAL3 expression is independent of the allantoin pathway inducer.