The TRM1 gene of Saccharomyces cerevisiae is necessary for the N2,N2-dimethylguanosine modification of both mitochondrial and cytoplasmic tRNAs. The DNA sequence of the TRM1 locus and the 5' ends of mRNAs expressed from this gene have been determined. The majority of the 5' ends map within a large open reading frame between two in-frame ATGs at positions +1 and +49. A small fraction of the 5' ends are located upstream of the first ATG. Both AUGs of the TRM1 mRNAs are used to initiate translation, and two forms of N2,N2-dimethylguanosine-specific tRNA methyltransferase, which differ by an amino-terminal extension of 16 amino acids, are made. Mitochondrial tRNAs are modified when the initiation of translation is limited to one or the other of the AUGs, suggesting that the amino-terminal extension is not necessary for import of the protein into mitochondria. Mitochondrial targeting information must, therefore, be located in a region of N2,N2-dimethylguanosine-specific tRNA methyltransferase that is found in both forms of the enzyme.