Cells of the yeast S. cerevisiae choose bud sites in an axial or bipolar spatial pattern depending on their cell type. We have identified a gene, BUD5, that resembles BUD1 and BUD2 in being required for both patterns; bud5- mutants also exhibit random budding in all cell types. The BUD5 nucleotide sequence predicts a protein of 538 amino acids that has similarity to the S. cerevisiae CDC25 product, an activator of RAS proteins that catalyzes GDP-GTP exchange. Two potential targets of BUD5 are known: BUD1 (RSR1) and CDC42, proteins involved in bud site selection and bud formation, respectively, that have extensive similarity to RAS. We also show that BUD5 interacts functionally with a gene, BEM1, that is required for bud formation. This interaction provides further support for the view that products involved in bud site selection guide the positioning of a complex necessary for bud formation.