Trimming of glucoses from N-linked core glycans on newly synthesized glycoproteins occurs sequentially through the action of glucosidases I and II in the endoplasmic reticulum (ER). We isolated enzymatically active glucosidase II from rat liver and found that, in contrast with previous reports, it contains two subunits (alpha and beta). Sequence analysis of peptides derived from them allowed us to identify their corresponding human cDNA sequences. The sequence of the alpha subunit predicted a soluble protein (104 kDa) devoid of known signals for residence in the ER. It showed homology with several other glucosidases but not with glucosidase I. Among the homologues, we identified a Saccharomyces cerevisiae gene, which we showed by gene disruption experiments to be the functional catalytic subunit of glucosidase II. The disrupted yeast strains had no detectable growth defect. The sequence of the beta subunit (58 kDa) showed no sequence homology with other known proteins. It encoded a soluble protein rich in glutamic and aspartic acid with a putative ER retention signal (HDEL) at the C terminus. This suggested that the beta subunit is responsible for the ER localization of the enzyme.