A polysaccharide capsule is one of the most important virulence factors for the pathogenic fungus Cryptococcus neoformans. We previously characterized two capsule-associated genes, CAP59 and CAP64. To further dissect the molecular mechanism of capsule synthesis, 16 acapsular mutants induced by 4-nitroquinoline-1-oxide were obtained. The acapsular phenotype of one of these mutants was complemented. The cloned gene was designated CAP60, and deletion of this newly described capsule-associated gene resulted in an acapsular phenotype. The proposed 67-kDa Cap60p contains 592 amino acids and appears to have a putative transmembrane domain close to the N terminus. DNA sequence analysis revealed that CAP60 has similarity to CAP59 at the center portion of its coding regions. Contour-clamped homogeneous electric field blot analysis suggested that these two genes are on the same chromosome. CAP60 and CAP59, however, could not be functionally substituted for each other by direct complementation or by domain swap experiments. In addition, CAP60 is closely linked to a gene which is similar to a cellulose growth-specific gene of Agaricus bisporus, CEL1. Immunogold electron microscopy studies of the epitope-tagged CAP60 gene revealed that Cap60p was primarily localized to the nuclear membrane. Animal model studies indicated that CAP60 is essential for virulence. Thus, CAP60 is required for both capsule formation and virulence.