The three yolk proteins of Drosophila melanogaster are synthesized in the fat body and ovarian follicle cells. A mutation in yolk protein 3, YP3S1, has been described in which the leader sequence is not cleaved from the protein. We describe here ultrastructural and molecular studies on the YP3S1 mutant and show that the mutant protein enters the secretory pathway and forms precipitates, often as electron dense material in excessive elaborations of the plasma membrane. Females homozygous for YP3S1 lay fewer eggs than wild type flies and these embryos are less viable. The abnormal ultrastructure of the yolk spheres observed suggests that whilst YP3 is not completely essential for viability, it is required for normal yolk sphere morphogenesis.