Fructose-1,6-bisphosphatase, a key enzyme in gluconeogenesis, undergoes catabolite inactivation when glucose is added to gluconeogenetically active cells of the yeast Saccharomyces cerevisiae. Phosphorylation of the enzyme is followed by rapid degradation. To elucidate the cellular proteolytic system involved in catabolite-triggered degradation of fructose-1,6-bisphosphatase this event was followed in different protease-deficient yeast mutants. In a mutant defective in the proteolytic function of the vacuole the degradation rate of the enzyme is not diminished. In contrast mutants defective in the proteolytic activity of the proteasome exhibit a strongly reduced glucose-induced degradation of fructose-1,6-bisphosphatase as compared to their isogenic wild-type counterparts. Our studies suggest that catabolite inactivation of fructose-1,6-bisphosphatase occurs in the cytosol, the degradation event being mediated by the proteasome. An explanation is presented which tries to resolve the formerly conflicting results, which suggested glucose-triggered uptake of fructose-1,6-bisphosphatase into the vacuole followed by vacuolar proteolysis.