ras proteins are post-translationally processed at their carboxyl-terminal CAAX motif by a triplet of modifications: prenylation of C with farnesyl, proteolytic trimming of AAX, and carboxyl-methylation. These modifications co-operate with palmitoylation of nearby sites or a polybasic region to target plasma membrane localization. The related YPT/rab proteins in contrast are localized to compartments of the endo-membrane system and may be involved in directing membrane traffic. These proteins end in XCC or CXC motifs. We have analyzed the processing of members of this subfamily form the fission yeast Schizosaccharomyces pombe. We find using in vitro translation in reticulocyte lysates that YPT1, -3, and -5 are prenylated with geranylgeranyl and that they incorporate label from [3H]mevalonic acid when expressed in transfected COS cells in vivo. Furthermore, prenylation was necessary for membrane binding in vivo. The CXC protein YPT5, but neither of the two XCC proteins YPT1 and YPT3, was carboxyl-methylated in S. pombe and in COS cells in vivo. However, YPT5 was not carboxyl-methylated in vitro in lysates which were able to methylate ras protein. YPT3 was detectably palmitoylated when expressed in COS cells, though at a much lower level than ras.