Saccharomyces cerevisiae Gpi3p is the UDP-GlcNAc-binding and presumed catalytic subunit of the enzyme that forms GlcNAc-phosphatidylinositol in glycosylphosphatidylinositol biosynthesis. It is an essential protein with an EX7E motif that is conserved in four families of retaining glycosyltransferases. All Gpi3ps contain a cysteine residue four residues C-terminal to EX7E. To test their importance for Gpi3p function in vivo, Glu289 and 297 in the EX7E motif of S. cerevisiae Gpi3p, as well as Cys301, were altered by site-specific mutagenesis, and the mutant proteins tested for their ability to complement nonviable GPI3-deleted haploids. Gpi3p-C301A supported growth but membranes from C301A-expressing cells had low in vitro N-acetylglucosaminylphosphatidylinositol (GlcNAc-PI) synthetic activity. Haploids harboring Gpi3p-E289A proved viable, although slow growing but Gpi3-E297A did not support growth. The E289D and E297D mutants both supported growth at 25 degrees C, but, whereas the E289D strain grew at 37 degrees C, the E297D mutant did not. Membranes from E289D mutants had severely reduced in vitro GlcNAc-PI synthetic activity and E297D membranes had none. The mutation of the first Glu in the EX7E motif of Schizosaccharomyces pombe Gpi3p (Glu277) to Asp complemented the lethal null mutation in gpi3+ and supported growth at 37 degrees C, but the E285D mutant was nonviable. Our results suggest that the second Glu residue of the EX7E motif in Gpi3p is of greater importance than the first for function in vivo. Further, our findings do not support previous suggestions that the first Glu of an EX7E protein is the nucleophile and that Cys301 has an important role in UDP-GlcNAc binding by Gpi3ps.