Acyl-CoA:diacylglycerol acyltransferase (EC 2.3.1.20) is a membrane protein present mainly in the endoplasmic reticulum. It catalyzes the final and committed step in the biosynthesis of triacylglycerol, which is the principal repository of fatty acids for energy utilization and membrane formation. Two distinct family members of acyl-CoA:diacylglycerol acyltransferase, known as DGAT1 and DGAT2, have been characterized in different organisms, including mammals, fungi, and plants. In this study, we characterized the functional role and topological orientation of signature motifs in yeast (Saccharomyces cerevisiae) DGAT2 using mutagenesis in conjunction with chemical modification. Our data provide evidence that both the N and C termini are oriented toward the cytosol and have different catalytic roles. A highly conserved motif, (129)YFP(131), and a hydrophilic segment exclusive to yeast DGAT2 reside in a long endoplasmic reticulum luminal loop following the first transmembrane domain and play an essential role in enzyme catalysis. In addition, the strongly conserved His(195) within the motif HPHG, which may play a role in the active site of DGAT2, is likely embedded in the membrane. These results indicate some similarities to the topology model of murine DGAT2 but also reveal striking differences suggesting that the topological organization of DGAT2 is not ubiquitously conserved.