The cloning, expression, and biochemical characterization of an essential gene of Saccharomyces cerevisiae that encodes for a new member of the TBP1-like subfamily of putative ATPases are described. The protein is 72% identical at the amino acid level to subunit four (S4) of the human 26 S protease and 73% identical to Schizosaccharomyces pombe MTS2 gene product. The purified, recombinant protein, designated Yhs4p, has an estimated molecular mass of 49 kDa and exhibits a Mg(2+)-dependent ATPase activity with nucleotide specificity and Km for ATP similar to those exhibited by the human 26 S protease. The observed ATPase activity was reduced by 73% upon the introduction of point mutation K229Q in the "P-loop" domain of the ATP-binding site relative to the nonmutated form of the protein. This is the first direct biochemical evidence supporting the putative ATPase activity of a member of the TBP1-like subfamily. Furthermore, the experimental results demonstrate a regulatory function for the amino-terminal region of the molecule. The amino-terminal truncated form of Yhs4p lacking two clusters of positively charged amino acids exhibits a greater ATPase activity. The ATPase activity of both the truncated and complete forms of Yhs4p is stimulated by polyanions. Polylysine partially inhibits the ATPase activity of the amino-terminal truncated form having no observable effect on the complete protein. N-Ethylmaleimide inhibits the ATPase activity of both forms of Yhs4p. We propose that Yhs4p ATPase may play an essential role in the regulatory function of the proteolytic activity of the yeast 26 S protease.