The stable inheritance of the 2m plasmid in a growing population of Saccharomyces cerevisiae is dependent on two plasmid-encoded proteins (Rep1p and Rep2p), together with the cis-acting locus REP3 (STB). In this study we demonstrate that short carboxy-terminal deletions of Rep1p and Rep2p severely diminish their normal capacity to localize to the yeast nucleus. The nuclear targeting, as well as their functional role in plasmid partitioning, can be restored by the addition of a nuclear localization sequence to the amino or the carboxy terminus of the shortened Rep proteins. Analyses of deletion derivatives of the Rep proteins by using the in vivo dihybrid genetic test in yeast, as well as by glutathione S-transferase fusion trapping assays in vitro demonstrate that the amino-terminal portion of Rep1p (ca. 150 amino acids long) is responsible for its interactions with Rep2p. In a monohybrid in vivo assay, we have identified Rep1p, Rep2p, and a host-encoded protein, Shf1p, as being capable of interacting with the STB locus. The Shf1 protein expressed in Escherichia coli can bind with high specificity to the STB sequence in vitro. In a yeast strain deleted for the SHF1 locus, a 2m circle-derived plasmid shows relatively poor stability.The 2m circle, a relatively small circular plasmid (6,318 bp) present in most common strains of Saccharomyces cerevisiae, has optimized a partitioning system and an amplification system that allow it to be propagated stably in a cell population at a copy number of approximately 60 to 100 per cell (reviewed in reference 2). Genetic analyses suggest that two plasmid-coded proteins, Rep1p and Rep2p, in conjunction with a cis-acting locus STB (also called REP3) contribute to the stability function (16,17,19,23). One plausible mechanism for plasmid stability is that the interaction of Rep1p and Rep2p with the STB element serves to overcome the normal bias in plasmid segregation that tends to favor the mother cell over the daughter cell (22). The evidence for this suspected DNA-protein interaction is quite preliminary and rests almost entirely on the observation that urea-solubilized yeast extracts expressing Rep1p and Rep2p or [cir 0 ] extracts supplemented exogenously with Rep1p and Rep2p can bind STB (14).The need for plasmid amplification arises only if and when there is a decrease in copy number below the steady-state value. Normally, each plasmid molecule is replicated once, and only once, per cell cycle (35), and the daughter molecules are partitioned efficiently at cytokinesis (27). When there is a drop in copy number, the amplification system overrides the cell cycle restriction of a single round of plasmid replication during one S phase. Plasmid amplification is absolutely dependent on the 2m circle Flp site-specific recombination system (33). A currently favored model for amplification proposes the recombinational inversion of a bidirectional replication fork and the resultant double-rolling-circle replication mode as the means for obtaining multiple replicas of the plasmid fro...