The Saccharomyces cerevisiae YDJ1 protein (YDJ1p) contains a C-terminal “CaaX box” motif common to proteins that are modified by prenylation. In the present study we show that YDJ1p is a specific substrate for both yeast and mammalian protein farnesyltransferase enzymes in vitro. A mutant form of YDJ1p, in which the conserved cysteine of the CaaX box is mutated to a serine (ydj1-S406p), cannot be farnesylated in vitro. After expression in S. cerevisiae, ydj1-S406p displays a reduced electrophoretic mobility and an increased cytosolic localization in subcellular fractionation experiments when compared to wild type YDJ1p. Expression of ydj1-S406 in cells lacking YDJ1 results in a temperature-sensitive growth phenotype in S. cerevisiae. These data indicate that farnesylation of YDJ1p is required for its function at elevated temperatures.