Saccharomyces cerevisiae exhibits polarized growth during two phases of its life cycle, budding and mating. The site for polarization during vegetative growth is determined genetically: a and alpha haploid cells exhibit an axial budding pattern, and a/alpha diploid cells exhibit a bipolar pattern. During mating, each cell polarizes towards its partner to ensure efficient mating. SPA2 is required for the bipolar budding pattern (Snyder. M 1989. J. Cell Biol. 108:1419-1429; Zahner, J.A., H.A. Harkins, and J.R. Pringle. 1996. Mol. Cell. Biol. 16:1857-1870) and polarization during mating (Snyder, M., S. Gehrung, and B.D. Page. 1991. J. Cell Biol. 114: 515-532). We previously identified mutants defective in PEA2 and SPA2 which alter cell polarization in the presence of mating pheromone in a similar manner (Chenevert, J., N. Valtz, and I. Herskowitz. 1994. Genetics, 136:1287-1297). Here we report the further characterization of these mutants. We have found that PEA2 is also required for the bipolar budding pattern and that it encodes a novel protein with a predicted coiled-coil domain. Pea2p is expressed in all cell types and is localized to sites of polarized growth in budding and mating cells in a pattern similar to Spa2p, Pea2p and Spa2p exhibit interdependent localization: Spa2p is produced in pea2 mutants but fails to localize properly; Pea2p is not stably produced in spa2 mutants. These results suggest that Pea2p and Spa2p function together as a complex to generate the bipolar budding pattern and to guarantee proper polarization during mating.