The sequences directing formation of mRNA 3' ends in Saccharomyces cerevisiae are not well defined. This is in contrast to the situation in higher eukaryotes in which the sequence AAUAAA is known to be crucial to proper 3'-end formation. The AAUAAA hexanucleotide is found upstream of the poly(A) site in some but not all yeast genes. One of these is the gene coding for alcohol dehydrogenase, ADH2. Deletion or a double point mutation of the AAUAAA has only a small effect on the efficiency of the reaction, and in contrast to the mammalian system, it is most likely not operating as a major processing signal in the yeast cell. However, we isolated point mutations which reveal that a region located approximately 80 nucleotides upstream of the poly(A) site plays a critical role in either transcription termination, polyadenylation, or both. These mutations represent the first point mutations in yeasts which significantly reduce the efficiency of 3'-end formation.