A cytoplasmically inherited element, [URE3], allows yeast to use ureidosuccinate in the presence of ammonium ion. Chromosomal mutations in the URE2 gene produce the same phenotype. [URE3] depends for its propagation on the URE2 product (Ure2p), a negative regulator of enzymes of nitrogen metabolism. Saccharomyces cerevisiae strains cured of [URE3] with guanidium chloride were shown to return to the [URE3]-carrying state without its introduction from other cells. Overproduction of Ure2p increased the frequency with which a strain became [URE3] by 100-fold. In analogy to mammalian prions, [URE3] may be an altered form of Ure2p that is inactive for its normal function but can convert normal Ure2p to the altered form. The genetic evidence presented here suggests that protein-based inheritance, involving a protein unrelated to the mammalian prion protein, can occur in a microorganism.