Biotin synthase catalyzes the insertion of a sulfur atom between two carbon atoms of dethiobiotin to form biotin in the last step of the biotin biosynthesis pathway. In Escherichia coli, biotin synthase is coded for by bioB gene. We report here cloning, sequencing, and initial functional characterization of the yeast gene for biotin synthase in Saccharomyces cerevisiae. We have named this gene BIO2. It consists of a 355-codon open reading frame near the ZUO1 gene. Analysis of the yeast protein encoded by the BIO2 gene reveals that it shares extensive homology with biotin synthases of E. coli and Bacillus sphaericus. The yeast and the two bacterial biotin synthase proteins have similar molecular weights, amino acid compositions, and hydropathies. The plasmid pUCBIO2 containing the yeast BIO2 gene completely complements E. coli bioB- and delta bio mutants and enables these mutants to grow on dethiobiotin. Although BIO2 is physically linked to ZUO1, which encodes the putative left-handed Z-DNA binding protein zuotin, it appears to be regulated independently from it. The yeast BIO2 and ZUO1 genes reside near ADE3 gene on chromosome VII. BIO2 is the first eukaryotic gene reported from the biotin biosynthetic pathway.