Eukaryotic translation initiation factor 2B (eIF2B) is the guanine nucleotide exchange factor for protein synthesis initiation factor 2 (eIF2). Composed of five subunits, it converts eIF2 from a GDP-bound form to the active eIF2-GTP complex. This is a regulatory step of translation initiation. In vitro, eIF2B catalytic function can be provided by the largest (epsilon) subunit alone (eIF2Bepsilon). This activity is stimulated by complex formation with the other eIF2B subunits. We have analyzed the roles of different regions of eIF2Bepsilon in catalysis, in eIF2B complex formation, and in binding to eIF2 by characterizing mutations in the Saccharomyces cerevisiae gene encoding eIF2Bepsilon (GCD6) that impair the essential function of eIF2B. Our analysis of nonsense mutations indicates that the C terminus of eIF2Bepsilon (residues 518 to 712) is required for both catalytic activity and interaction with eIF2. In addition, missense mutations within this region impair the catalytic activity of eIF2Bepsilon without affecting its ability to bind eIF2. Internal, in-frame deletions within the N-terminal half of eIF2Bepsilon disrupt eIF2B complex formation without affecting the nucleotide exchange activity of eIF2Bepsilon alone. Finally, missense mutations identified within this region do not affect the catalytic activity of eIF2Bepsilon alone or its interactions with the other eIF2B subunits or with eIF2. Instead, these missense mutations act indirectly by impairing the enhancement of the rate of nucleotide exchange that results from complex formation between eIF2Bepsilon and the other eIF2B subunits. This suggests that the N-terminal region of eIF2Bepsilon is an activation domain that responds to eIF2B complex formation.