Posttranslational processing/modification is required for membrane localization and activation of ras proteins. In the case of yeast RAS2 protein, we have reported that the process starts with the removal of the initiator methionine followed by polyisoprenylation, removal of 3 amino acid residues from the C terminus, methyl esterification, and fatty acid acylation (Fujiyama, A., and Tamanoi, F. (1990) J. Biol. Chem. 265, 3362-3368). In this study, we demonstrate that polyisoprenylation and methyl esterification of the cysteine residue in the C-terminal domain of the RAS2 protein are involved in the conversion process from precursor form to intermediate form. The polyisoprenoid moiety attached to the RAS2 protein was identified as a 15-carbon farnesyl group through two independent experiments: the release of S-farnesylcysteine with carboxypeptidase Y from the RAS2 protein, and the recovery of radioactive farnesol through methyliodide treatment of the RAS2 protein purified from yeast cells labeled with [3H]mevalonic acid. The farnesyl group attached to the RAS2 protein was detected predominantly in the C-terminal peptide, SGSGGCC, both in the intermediate and in the fatty acid acylated RAS2 protein. The C-terminal cysteine of the intermediate protein is also modified by methyl esterification in a nearly stoichiometric manner.