Subunit C is a V-1 sector subunit found in all vacuolar H+-ATPases (V-ATPases) that may be part of the peripheral stalk connecting the peripheral V-1 sector with the membrane-bound V. sector of the enzyme (Wilkens, S., Vasilyeva, E., and Forgac, M. (1999) J. Biol. Chem. 274, 31804-31810). To elucidate subunit C function, we performed random and site-directed mutagenesis of the yeast VMA5 gene. Site-directed mutations in the most highly conserved region of Vma5p, residues 305-325, decreased catalytic activity of the V-ATPase by up to 48% without affecting assembly. A truncation mutant (K360stop) identified by random mutagenesis suggested a small region near the C terminus of the protein (amino acids 382-388) might be important for subunit stability. Site-directed mutagenesis revealed that three aromatic amino acids in this region (Tyr-382, Phe-385, and Tyr-388) in addition to four other conserved aromatic amino acids (Phe-260, Tyr-262, Phe-296, Phe-300) are essential for stable assembly of V-1 with V-0, although alanine substitutions at these positions support some activity in vivo. Surprisingly, three mutations (F260A, Y262A, and F385A) greatly decrease the stability of the V-ATPase in vitro but increase its k(cat) for ATP hydrolysis and proton transport by at least 3-fold. The peripheral stalk of V-ATPases must balance the stability essential for productive catalysis with the dynamic instability involved in regulation; these three mutations may perturb that balance.