The endoplasmic reticulum (ER) of mammalian cells contains a 78 kd protein (BiP) that is believed to assist in the folding of secretory and transmembrane proteins. We have used a cDNA encoding mouse BiP to isolate the homologous gene from S. cerevisiae, which encodes a sequence of 882 amino acids, 431 of which are identical to mouse BiR Like its mammalian counterpart, yeast BiP is encoded by an HSPirO-like gene whose transcription is stimulated by the presence of unfolded polypeptides in the ER. The gene encoding yeast BiP is essential for cell growth and, unexpectedly, is identical to the recently cloned KARP gene. Expression of mammalian BiP in S. cerevisiae can complement a mutant allele of KARP that is temperature sensitive for growth and nonconditionally defective for karyogamy. These results suggest that deficiencies in BiP may cause generalized failure of protein folding in the ER, leading to pleiotropic effects on cellular metabolism.