The nucleotide sequence of a 2.5 X 10(3)-base segment of yeast nuclear DNA, containing the structural gene for the 40-kDa subunit II of the ubiquinol:cytochrome-c oxidoreductase, has been determined. The region contains only one single reading frame of length sufficient to encode a protein of the size of subunit II. The mature protein is predicted to have a length of 352 amino acids, with a molecular mass of 38714 Da. It is predominantly hydrophilic, with an overall polarity of 45%. Comparison of the sequence of the reading frame with that derived from direct sequence analysis of the N terminus of the mature 40-kDa protein shows that subunit II is synthesized as a longer precursor and shows that the extension is N-terminal. The presequence is 16 amino acids long and it contains a number of positively charged residues and lacks acidic ones. It is also rich in neutral, polar amino acids. S1 nuclease protection analysis of DNA X RNA hybrids identifies two major and one minor transcript of the gene, whose 5' termini map approximately 55, 65 and 75 nucleotides upstream of the initiation codon. Sequences 5' of these termini lack obvious homology to the regulatory sequences of other imported mitochondrial proteins, whose synthesis is controlled by oxygen and by catabolite repression. A mutant lacking a functional subunit II gene has been constructed by a one-step gene-disruption procedure. This mutant grows only slowly on glycerol and still displays a low level of QH2: cytochrome-c oxidoreductase activity (approx. 5% of that of wild type). The implications of this finding for the possible role of subunit II in the complex are discussed.