Microscopic screening of a collection of cold-sensitive mutants of Saccharomyces cerevisiae led to the identification of a new gene, CDC55, which appears to be involved in the morphogenetic events of the cell cycle. CDC55 maps between CDC43 and CHC1 on the left arm of chromosome VII. At restrictive temperature, the original cdc55 mutant produces abnormally elongated buds and displays a delay or partial block of septation and/or cell separation. A cdc55 deletion mutant displays a cold-sensitive phenotype like that of the original isolate. Sequencing of CDC55 revealed that it encodes a protein of about 60 kDa, as confirmed by Western immunoblots using Cdc55p-specific antibodies. This protein has greater than 50% sequence identity to the B subunits of rabbit skeletal muscle type 2A protein phosphatase; the latter sequences were obtained by analysis of peptides derived from the purified protein, a polymerase chain reaction product, and cDNA clones. An extragenic suppressor of the cdc55 mutation lies in BEM2, a gene previously identified on the basis of an apparent role in bud emergence.