Saccharomyces cerevisiae a-factor is a dodecapeptide pheromone in which the carboxyl group of the COOH-terminal cysteine residue is methyl-esterified and the sulfhydryl side chain is conjugated in thioether linkage to a farnesyl moiety. We found that MAT a ste14 mutant cells secreted a biologically inactive form of a-factor which had more hydrophilic character than the wild-type pheromone. The authentic pheromone could be metabolically labeled with [methyl-3H]methionine, and the resulting COOH-terminal methyl ester could be removed by mild alkaline hydrolysis. In contrast, a-factor secreted by ste14 mutants did not incorporate a base-labile 3H-methyl moiety. Base treatment converted the normal pheromone into a form which was biologically inactive and which comigrated with the ste14 form of the peptide upon thin-layer chromatography. These results indicate that STE14 gene function is required for COOH-terminal methylation of a-factor.