The Saccharomyces cerevisiae CDC25 gene encodes a guanine nucleotide exchange factor (GEF) for Ras proteins. Its catalytic domain is highly homologous to Ras-GEFs from all eukaryotes. Even though Cdc25 is the first Ras-GEF identified in any organism, we still know very little about how its function is regulated in yeast. In this work we provide evidence for the involvement of the N terminus of Cdc25 in the regulation of its activity. A truncated CDC25 lacking the noncatalytic C-terminal coding sequence was identified in a screen of high-copy suppressors of the heat-shock-sensitive phenotype of strains in which the Ras pathway is hyper-activated. The truncated gene acts as a dominant-negative mutant because it only suppresses the heat-shock sensitivity of strains that require the function of CDC25. Our two-hybrid assays and immunoprecipitation analyses show interactions between the N terminus of Cdc25 and itself, the C terminus, and the full-length protein. These results suggest that the dominant-negative effect may be a result of oligomerization with endogenous Cdc25. Further evidence of the role of the N terminus of Cdc25 in the regulation of its activity is provided by the mapping of the activating mutation of CDC25HS20 to the serine residue at position 365 in the noncatalytic N-terminal domain. This mutation induces a phenotype similar to activating mutants of other genes in the Ras pathway in yeast. Hence, the N terminus may exert a negative control on the catalytic activity of the protein. Taken together these results suggest that the N terminus plays a crucial role in regulating Cdc25 and consequently Ras activity, which in S. cerevisiae is essential for cell cycle progression.