We previously isolated the Saccharomyces cerevisiae HKR1 gene that confers on S. cerevisiae cells resistance to HM-1 killer toxin secreted by Hansenula mrakii (S. Kasahara, H. Yamada, T. Mio, Y. Shiratori, C. Miyamoto, T. Yabe, T. Nakajima, E. Ichishima, and Y. Furuichi, J. Bacteriol. 176:1488-1499, 1994). HKR1 encodes a type 1 membrane protein that contains a calcium-binding consensus sequence (EF hand motif) in the cytoplasmic domain. Although the null mutation of HKR1 is lethal, disruption of the 3' part of the coding region, which would result in deletion of the cytoplasmic domain of Hkr1p, did not affect the viability of yeast cells. This partial disruption of HKR1 significantly reduced beta-1,3-glucan synthase activity and the amount of beta-1,3-glucan in the cell wall and altered the axial budding pattern of haploid cells. Neither chitin synthase activity nor chitin content was significantly affected in the cells harboring the partially disrupted HKR1 allele. Immunofluorescence microscopy with an antibody raised against Hkr1p expressed in Escherichia coli revealed that Hkr1p was predominantly localized on the cell surface. The cell surface localization of Hkr1p required the N-terminal signal sequence because the C-terminal half of Hkr1p was detected uniformly in the cells. These results demonstrate that HKR1 encodes a cell surface protein that regulates both cell wall beta-glucan synthesis and budding pattern and suggest that bud site assembly is somehow related to beta-glucan synthesis in S. cerevisiae.