Assembly at the mother-bud neck of a filamentous collar containing five septins (Cdc3, Cdc10, Cdc11, Cdc12, and Shs1) is necessary for proper morphogenesis and cytokinesis. We show that Cdc10 and Cdc12 possess GTPase activity and appropriate mutations in conserved nucleotide-binding residues abrogate GTP binding and/or hydrolysis in vitro. In vivo, mutants unable to bind GTP prevent septin collar formation, whereas mutants that block GTP hydrolysis do not. GTP binding-defective Cdc10 and Cdc12 form soluble heteromeric complexes with other septins both in yeast and in bacteria; yet, unlike wild-type, mutant complexes do not bind GTP and do not assemble into filaments in vitro. Absence of a p21-activated protein kinase (Cla4) perturbs septin collar formation. This defect is greatly exacerbated when combined with GTP binding-defective septins; conversely, the septin collar assembly defect of such mutants is suppressed efficiently by CLA4 overexpression. Cla4 interacts directly with and phosphorylates certain septins in vitro and in vivo. Thus, septin collar formation may correspond to septin filament assembly, and requires both GTP binding and Cla4-mediated phosphorylation of septins.