We have constructed a series of chimeric yeast/mouse and yeast/Bacillus subtilis ferrochelatase genes in order to investigate domains of the ferrochelatase that are important for activity and/or association with the membrane. These genes were expressed in a Saccharomyces cerevisiae mutant in which the endogenous ferrochelatase gene (HEM15) had been deleted, and the phenotypes of the transformants were characterized. Exchanging the approximately 40-amino-acid C-terminus between the yeast and mouse ferrochelatases caused a total loss of activity and the hybrid proteins were unstable when overproduced in Escherichia coli. The water-soluble ferrochelatase of B. subtilis did not complement the yeast mutant, although a large amount of active protein accumulated in the cytosol. Addition of the N-terminal leader sequence of yeast ferrochelatase to the B. subtilis enzyme targeted the fusion protein to mitochondria, but both the precursor and the mature forms of the enzyme were inactive in vivo and had residual activity when measured in vitro. An internal approximately 45-amino-acid segment located at the N-terminus of yeast ferrochelatase was identified, which, when replaced with the corresponding 30-amino-acid segment of the B. subtilis enzyme, caused the yeast enzyme to be located in the mitochondrial matrix as a soluble protein. The fusion protein was inactive in vivo and had residual activity in vitro. We speculate that this segment, which shows the greatest variability between species, is responsible for the association of the enzyme with the membrane.