rab proteins are low molecular weight GTP-binding proteins highly related to Ypt1p and Sec4p, which are involved in the control of secretion in yeast Saccharomyces cerevisiae. Morphological and biochemical studies have shown that rab proteins are membrane associated and are localized to specific subcompartments along the exocytic and endocytic pathway. Membrane association requires the presence of C-terminal cysteine residues. The present report indicates that the structurally distinct cysteine motifs of rab proteins are subjected to isoprenylation both in vitro and in vivo. Studies on deletion mutants suggest that an intact C-terminal end is required for the association of rab proteins with the membrane and is necessary for the post-translational modification. Finally, we show that the isoprenoid transferase which modifies rab termini is different from the enzyme which farnesylates nuclear lamins and ras proteins in vitro.