Mitochondrial cytochrome c contains a heme group covalently attached through thioether linkages to two cysteinyl residues of the protein. We demonstrate here that the nuclear gene, CYC3, in the yeast Saccharomyces cerevisiae, encodes cytochrome c heme lyase (CCHL), the enzyme catalyzing the attachment of heme to apocytochrome c. Mitochondrial extracts from cyc3- mutants are deficient in CCHL activity compared with extracts from normal strains, whereas strains carrying multiple copies of the CYC3 gene exhibit high levels of the activity. The CYC3 gene was cloned by functional complementation of a cyc3- mutant using a previously isolated plasmid containing the gene PYK1, which is tightly linked to CYC3. An open reading frame encoding a protein of 269 amino acids was identified from the DNA sequence of a fragment encompassing the CYC3 gene, and the corresponding transcript shown to be approximately 0.9 kb in length. CCHL appears to be a single polypeptide chain which acts specifically on the two forms of cytochrome c, but not on cytochrome c1.