Chitin is a minor but essential component of the cell wall of Saccharomyces cerevisiae, with functions in septum formation in the vegetative life cycle and also in conjugation and spore cell-wall synthesis in the sexual cycle. Of the three chitin synthases present in yeast, chitin synthase III (CSIII) is responsible for the synthesis of most of the chitin found in the cell, including a chitin ring at early budding, chitin interspersed in the cell wall, and chitin laid down during the sexual cycle. We have tagged Chs3p, the putative catalytic subunit of CSIII, with the immunoreactive epitope of influenza virus hemagglutinin to follow expression of the protein. Little correlation was found between the levels of transcription and translation of Chs3p and in vivo function, supporting our previous conclusion that regulation of CSIII occurs at the posttranslational level. To identify possible regions of the protein involved in catalysis or regulation, mutations were generated in the QRRRW 'signature sequence' of chitin synthases. Arginine residue mutations in Chs3p, and in Chs1p and Chs2p, resulted in a loss of both function in vivo and enzymatic activity. Mutations in a serine residue adjacent to glutamine in Chs3p caused loss of function in vivo with a moderate decrease in CSIII activity, suggesting a regulatory role for the serine residue in chitin biosynthesis. Several truncations in the unique hydrophilic carboxy-terminal region of Chs3p identified a sequence of about 25 amino acids that is required for both function and in vitro activity. Since this region is not present in Chs1 or Chs2, it may be involved in the specific regulation of CSIII.