Killer strains of the yeast Kluyveromyces lactis secrete a heterotrimeric protein toxin (zymocin) to inhibit the growth of sensitive yeasts. The cytotoxicity of zymocin resides in the γ subunit (γ-toxin), however the mechanism of cytotoxicity caused by γ-toxin was previously unknown. This thesis aimed to unravel the mode of γ-toxin action and characterize the interaction between γ-toxin and its substrates. Previous studies suggested a link between the action of γ-toxin and a distinct set of transfer RNAs. In paper I, we show that γ-toxin is a tRNA anticodon endonuclease which cleaves tRNA carrying modified nucleoside 5-methoxycarbonylmethyl-2-thiouridine (mcm5s2U) at position 34 (wobble position). The cleavage occurs 3’ to the wobble uridine and yields 2’, 3’-cyclic phosphate and 5´-hydroxyl termini. In paper II, we identified the determinants in tRNA important for efficient γ-toxin cleavage. The modifications present on the wobble uridines have different effects on tRNA cleavage by γ-toxin. The Saccharomyces cerevisiae wobble modification mcm5 group has a strong positive effect, whereas the Escherichia coli wobble modification 5-methylaminomethyl group has a strong inhibitory effect on tRNA cleavage. The s2 group present in both S. cerevisiae and E. coli tRNAs has a weaker positive effect on the cleavage. The anticodon stem loop (ASL) of tRNA represents the minimal structural requirement for γ-toxin action. Nucleotides U34U35C36A37C38 in the ASL are required for optimal cleavage by γ-toxin, whereas a purine at position 32 or a G at position 33 dramatically reduces the reactivity of ASL. Screening for S. cerevisiae mutants resistant to zymocin led to the identification of novel proteins important for mcm5s2U formation (paper III). Sit4p (a protein phosphatase), Sap185p and Sap190p (two of the Sit4 associated proteins), and Kti14p (a protein kinase) are required for the formation of mcm5 side chain. Ncs2p, Ncs6p, Urm1p, and Uba4p, the latter two function in a protein modification (urmylation) pathway, are required for the formation of s2 group. The gene product of YOR251C is also involved in the formation of s2 group. The involvement of multiple proteins suggests that the biogenesis of mcm5s2U is very complex.