The Sep1 (also known as Kem1, Xrn1, Rar5, DST2/Stpbeta) protein of Saccharomyces cerevisiae is an Mr 175,000 multifunctional exonuclease with suspected roles in RNA turnover and in the microtubular cytoskeleton as well as in DNA recombination and DNA replication. The most striking phenotype of SEP1 null mutations is quantitative arrest during meiotic prophase at the pachytene stage. We have constructed a set of N- and C-terminal as well as internal deletions of the large SEP1 gene. Analysis of these deletion mutations on plasmids in a host carrying a null allele (sep1 ) revealed that at least 270 amino acids from the C-terminus of the wild-type protein were dispensable for complementing the slow growth and benomyl hypersensitivity of a null mutant. In contrast, any deletion at the N-terminus abrogated complementing activity for these phenotypes. The sequences essential for function correspond remarkably well with the regions of Sep1 that are homologous to its Schizosaccharomyces pombe counterpart Exo2. In addition, these experiments showed that, despite the high intracellular levels of Sep1, over-expression of this protein above these levels is detrimental to the cell. We discuss the potential cellular roles of the Sep1 protein as a microtubule-nucleic acid interface protein linking its suspected function in the microtubular cytoskeleton with its role as a nucleic acid binding protein.