Dominant mutations at the DAF2 locus confer resistance to the cell-cycle arrest that normally occurs in MATa cells exposed to alpha-factor. One of these alleles, DAF2-2, has also been shown to suppress the constitutive signaling phenotype of null alleles of the gene encoding the alpha subunit of the G protein involved in pheromone signaling. These observations indicate that DAF2-2 inhibits transmission of the pheromone response signal. The DAF2-2 mutation has two effects on the expression of a pheromone inducible gene, FUS1. In DAF2-2 cells, FUS1 RNA is present at an increased basal level but is no longer fully inducible by pheromone. Cloning of DAF2-2 revealed that it is an allele of STE3, the gene encoding the a-factor receptor. STE3 is normally an alpha-specific gene, but is inappropriately expressed in a cells carrying a STE3DAF2-2 allele. The two effects of STE3DAF2-2 alleles on the pheromone response pathway are the result of different functions of the receptor. The increased basal level of FUS1 RNA is probably due to stimulation of the pathway by an autocrine mechanism, because it required at least one of the genes encoding a-factor. Suppression of a null allele of the G alpha subunit gene, the phenotype associated with the inhibitory function of STE3, was independent of a-factor. This suppression was also observed when the wild-type STE3 gene was expressed in a cells under the control of an inducible promoter. Inappropriate expression of STE2 in alpha cells was able to suppress a point mutation, but not a null allele, of the G alpha subunit gene. The ability of the pheromone receptors to block the pheromone response signal in the absence of the G alpha subunit indicates that these receptors interact with another component of the signal transduction pathway.