Ubiquinone functions in the mitochondrial electron transport chain. Recent evidence suggests that the reduced form of ubiquinone (ubiquinol) may also function as a lipid soluble antioxidant. The biosynthesis of ubiquinone requires two O-methylation steps. In eukaryotes, the first O-methylation step is carried out by the Coq3 polypeptide, which catalyzes the transfer of a methyl group from S-adenosylmethionine to 3,4-dihydroxy-5-polyprenylbenzoate. In Escherichia coli, 2-polyprenyl-6-hydroxyphenol is the predicted substrate; however, the corresponding O-methyltransferase has not been identified. The second O-methylation step in E. coli, the conversion of demethylubiquinone to ubiquinone, is carried out by the UbiG methyltransferase, which is 40% identical in amino acid sequence with the yeast Coq3 methyltransferase. On the basis of the chemical similarity of the first and last methyl-acceptor substrates and the high degree of amino acid sequence identity between Coq3p and UbiG, the ability of UbiG to catalyze both O-methylation steps was investigated. The current study shows that the ubiG gene is able to restore respiration in the yeast coq3 mutant, provided ubiG is modified to contain a mitochondrial leader sequence. The mitochondrial targeting of O-methyltransferase activity is an essential feature of the ability to restore respiration and hence ubiquinone biosynthesis in vivo. In vitro import assays show the mitochondrial leader sequence present on Coq3p functions to direct mitochondrial import of Coq3p in vitro and that processing to the mature form requires a membrane potential. In vitro methyltransferase assays with E. coli cell lysates and synthetically prepared farnesylated-substrate analogs indicate that UbiG methylates both the derivative of the eukaryotic intermediate, 3,4-dihydroxy-5-farnesylbenzoate, as well as that of the E. coli intermediate, 2-farnesyl-6-hydroxyphenol. The data presented indicate that the yeast Coq3 polypeptide is located in the mitochondria and that E. coli UbiG catalyzes both O-methylation steps in E. coli.