RGS4, a mammalian GTPase activating protein for G protein alpha subunits, was identified by its ability to inhibit the pheromone response pathway in Saccharomyces cerevisiae. To define regions of RGS4 necessary for its function in vivo, we assayed mutants for activity in this system. Deletion of the N-terminal 33 aa of RGS4 (Delta1-33) yielded a nonfunctional protein and loss of plasma membrane localization. These functions were restored by addition of a C-terminal membrane-targeting sequence to RGS4 (Delta1-33). Thus, plasma membrane localization is tightly coupled with the ability of RGS4 to inhibit signaling. Fusion of the N-terminal 33 aa of RGS4 to green fluorescent protein was sufficient to localize an otherwise soluble protein to the plasma membrane, defining this N-terminal region as a plasma membrane anchorage domain. RGS4 is palmitoylated, with Cys-2 and Cys-12 the likely sites of palmitoylation. Surprisingly, mutation of the cysteine residues within the N-terminal domain of RGS4 did not affect plasma membrane localization in yeast or the ability to inhibit signaling. Features of the N-terminal domain other than palmitoylation are responsible for the plasma membrane association of RGS4 and its ability to inhibit pheromone response in yeast.