Flies homozygous for the female sterile mutation fs(1)1163 produce eggs deficient in YP1, one of the three major yolk polypeptides. Genetic studies showed that fs(1)1163 is cis acting on YP1 quantity, so that mutation does not control a diffusible substance regulating YP1 production. The sterility and YP1 quantity phenotypes were not genetically separated from each other or from the structural gene for YP1, indicating that the mutation is located in or near Yp1. The amount of translatable YP1 message in mutant and wild-type cells was approximately equal, but the primary translation products were different in size and, hence, different in structure. The signal peptide was cleaved normally from the mutant polypeptide, and phosphorylation and glycosylation of the mutant YP1 also occur. However, YP1 processing intermediates that are transient in wild-type cells become major species in fs(1)1163 cells. We conclude that fs(1)1163 alters the primary structure of YP1 in a way that does not block signal-peptide cleavage but does alter later processing steps and hence its rate of secretion, leading to the YP1 deficiency found in the hemolymph and eggs.