Spa2p and Cdc10p both participate in bud site selection and cell morphogenesis in yeast, and spa2delta cdc10-10 cells are inviable. To identify additional components important for these processes in yeast, a colony-sectoring assay was used to isolate high-copy suppressors of the spa2delda cdc10-10 lethality. One such gene, AXL2, has been characterized in detail. axl2 cells are defective in bud site selection in haploid cells and bud in a bipolar fashion. Genetic analysis indicates that AXL2 falls into the same epistasis group as BUD3. Axl2p is predicted to be a type I transmembrane protein. Tunicamycin treatment experiments, biochemical fractionation and extraction experiments, and proteinase K protection experiments collectively indicate that Axl2p is an integral membrane glycoprotein at the plasma membrane. Indirect immunofluorescence experiments using either Axl2p tagged with three copies of a hemagglutinin epitope or high-copy AXL2 and anti-Axl2p antibodies reveal a unique localization pattern for Axl2p. The protein is present as a patch at the incipient bud site and in emerging buds, and at the bud periphery in small-budded cells. In cells containing medium-sized or large buds, Axl2p is located as a ring at the neck. Thus, Axl2p is a novel membrane protein critical for selecting proper growth sites in yeast. We suggest that Axl2p acts as an anchor in the plasma membrane that helps direct new growth components and/or polarity establishment components to the cortical axial budding site.