The yeast protein Bem1p, which bears two src homology region 3 (SH3) domains, is involved in cell polarization. A Rho-type GTPase, Rho3p, is involved in the maintenance of cell polarity for bud formation, and the rho3 defect is suppressed by a high dose of BEM1. Mutational analysis revealed that the second SH3 domain from the NH2 terminus (SH3-2) of Bem1p is important for the functions of Bem1p in bud formation and in the suppression of the rho3 defect. Boi2p, which bound to SH3-2 Bem1p, was identified using the two-hybrid system. Boi2p has a proline-rich sequence that is critical for displaying the Boi2p-Bem1p two-hybrid interaction, an SH3 domain in its NH2-terminal half, and a pleckstrin homology domain in its COOH-terminal half. A BOI2 homologue, BOI1, was identified as a gene whose overexpression inhibited cell growth. Cells overexpressing either BOI1 or BOI2 were arrested as large, round, and unbudded cells, indicating that the Boi proteins affect cell polarization. Genetic analysis revealed that BOI1 and BOI2 are functionally redundant and important for cell growth. delta boi1 delta boi2 cells became large round cells or lysed with buds, displaying defects in bud formation and in the maintenance of cell polarity. Analysis using several truncated versions of BOI2 revealed that the COOH-terminal half, which contains the pleckstrin homology domain is essential for the function of Boi2p in cell growth, while the NH2- terminal half is not, and the NH2-terminal half might be required for modulating the function of Bem1p. Overproduction of either Rho3p or the Rho3p-related GTPase Rho4p suppressed the boi defect. These results demonstrate that Rho3p GTPases and Boi proteins function in the maintenance of cell polarity for bud formation.