RAS2 protein of Saccharomyces cerevisiae undergoes post-translational modifications involving methyl esterification and palmitic acid addition, resulting in their association with the plasma membrane. In this paper, we provide evidence that two kinds of proteolytic events accompany the biosynthesis. This is shown by separating and characterizing three intracellular forms of RAS2 protein: precursor, intermediate, and mature (fatty acid-acylated) forms. N-Terminal sequencing has revealed that all three forms start with proline, which is the second amino acid expected from the RAS2 gene sequence. Thus, the first methionine is removed very early during the biosynthesis. Isolation and sequencing of C-terminal peptides indicate that three C-terminal amino acids present in the precursor form are removed in the intermediate and in the fatty acid acylated forms. C-Terminal proteolysis appears to accompany methyl esterification, since the methylation occurs with the intermediate and the fatty acid-acylated forms, but not with the precursor. Palmitic acid is identified as the major fatty acid attached to the fatty acid-acylated form.