The CAP (cyclase-associated protein) homologue of Dictyostelium discoideum is a phosphatidylinositol 4,5-bisphosphate (PIP(2)) regulated G-actin sequestering protein which is present in the cytosol and shows enrichment at plasma membrane regions. It is composed of two domains separated by a proline rich stretch. The sequestering activity has been localized to the C-terminal domain of the protein, whereas the presence of the N-terminal domain seems to be required for PIP(2)-regulation of the sequestering activity. Here we have constructed GFP-fusions of N- and C-domain and found that the N-terminal domain showed CAP-specific enrichment at the anterior and posterior ends of cells like endogenous CAP irrespective of the presence of the proline rich region. Mutant cells expressing strongly reduced levels of CAP were generated by homologous recombination. They had an altered cell morphology with very heterogeneous cell sizes and exhibited a cytokinesis defect. Growth on bacteria was normal both in suspension and on agar plates as was phagocytosis of yeast and bacteria. In suspension in axenic medium mutant cells grew more slowly and did not reach saturation densities observed for wild-type cells. This was paralleled by a reduction in fluid phase endocytosis. Development was delayed by several hours under all conditions assayed, furthermore, motile behaviour was affected.