MDY2, a gene required for efficient mating of the yeast Saccharomyces cerevisiae, was characterized in this study. The gene encodes a protein of 212 amino acids, which contains a ubiquitin-like (UBL) domain (residues 74-149). Deletion of MDY2 is associated with a five- to sevenfold reduction in mating efficiency, mainly due to defects in nuclear migration and karyogamy at the prezygotic stage. However, prior to mating pair fusion, shmoo formation is reduced by 30%, with a concomitant failure to form mating pairs. Strikingly, migration of the nucleus into the shmoo tip is also delayed or fails to occur. In addition, we show that in mdy2 mutants, microtubule bundles, as well as the microtubule end-binding protein Kar9, fail to localize properly to the shmoo tip, suggesting that the nuclear migration defect could be due to aberrant localization of Kar9. Pheromone signal transduction (as measured by FUS1 induction by alpha-factor) is not affected in mdy2delta mutants and mitosis is also normal in these cells. MDY2 is not induced by mating pheromone. In vegetatively growing cells, GFP-Mdy2 is localized in the nucleus, and remains nuclear after exposure of cells to alpha-factor. His-tagged Mdy2 shows no evidence of the C-terminal processing typical of ubiquitin, and also localizes to the nucleus. Thus MDY2 is a novel gene, whose product plays a role in shmoo formation and in nuclear migration in the pre-zygote, possibly by interacting with other UBL-type proteins that possess ubiquitin association (UBA) domains.