Oligosaccharyltransferase catalyzes the transfer of a preassembled high mannose oligosaccharide from a dolichol-oligosaccharide donor to consensus glycosylation acceptor sites in newly synthesized proteins in the lumen of the rough endoplasmic reticulum. The Saccharomyces cerevisiae oligosaccharyltransferase is an oligomeric complex composed of six non-identical subunits (alpha-zeta). The alpha, beta, gamma, and delta subunits of the oligosaccharyltransferase are encoded by the OST1, WBP1, OST3, and SWP1 genes, respectively. Here we describe the functional characterization of the OST2 gene that encodes the epsilon-subunit of the oligosaccharyltransferase. Genomic disruption of the OST2 locus was lethal in haploid yeast showing that expression of the Ost2 protein is essential for viability. Overexpression of the Ost2 protein suppresses the temperature-sensitive phenotype of the wbp1-2 allele and increases in vivo and in vitro oligosaccharyltransferase activity in a wbp1-2 strain. An analysis of a series of conditional ost2 mutants demonstrated that defects in the Ost2 protein cause pleiotropic underglycosylation of soluble and membrane-bound glycoproteins. Microsomal membranes isolated from ost2 mutant yeast show marked reductions in the in vitro transfer of high mannose oligosaccharide from exogenous lipid-linked oligosaccharide to a glycosylation site acceptor tripeptide. Surprisingly, the Ost2 protein was found to be 40% identical to the DAD1 protein (defender against apoptotic cell death), a highly conserved protein initially identified in vertebrate organisms. The protein sequence of ost2 mutant alleles revealed mutations at highly conserved residues in the Ost2p/DAD1 protein sequence.