MCD4 and GP17 are important for the addition of glycosylphosphatidylinositol (GPI) anchors to proteins in the yeast Saccharomyces cerevisiae, Mutations in these genes lead to a reduction of GPI anchoring and cell wall fragility. Gpi7 mutants accumulate a GPI lipid intermediate of the structure Man alpha 1-2[NH2-(CH2)(2)-PO4-->]Man-alpha 1-2Man alpha 1- 6[NH2-(CH2)(2)-PO4-->]Man alpha 1- 4GlcN alpha 1-6 [acyl-->] linositol-PO4-lipid, which, in comparison with the complete GPI precursor lipid CP2, lacks an HF-sensitive side chain on the alpha 1-6-linked mannose, In contrast, mcd4-174 accumulates only minor amounts of abnormal GPI intermediates. Here we investigate whether YLL031c, an open reading frame predicting a further homologue of GP17 and MCD4, plays any rob in GPI anchoring. YLL031c is an essential gene. Its depletion results in a reduction of GPI anchor addition to GPI proteins as well as to cell wall fragility. YLL031c-depleted cells accumulate GPI intermediates with the structures Man alpha 1-2Man alpha 1-2Man alpha 1-6[NH2-(CH2)(2)PO4-->]Man alpha 1- 4GlcN alpha 1-6[acyl-->]inositol-PO4-lipid and Man alpha 1-2Man alpha 1-2Man alpha 1-6Man alpha 1-4GlcN alpha 1-6[acyl-->] inositol-PO4-lipid. Subcellular localization studies of a tagged version of YLL031c suggest that this protein is mainly in the ER, in contrast to Gpi7p, which is found at the cell. surface, The data are compatible with the idea that YLL031c transfers the ethanolaminephosphate to the inner alpha 1-2-linked mannose, ie. the group that links the GPI lipid anchor to proteins, whereas Mcd4p and Gpi7p transfer ethanolaminephosphate onto the alpha 1-4- and alpha 1-6-linked mannoses of the GPI anchor, respectively.