The α and βγ subunits of heterotrimeric G-proteins contain specific lipid modifications, which are required for their biological function. However, the relevance of these modifications to the interactions within the heterotrimeric G-protein is not fully understood. In order to explore the role of the S-prenyl moiety of the isoprenylated βγ dimer of retinal transducin, βγ_t, in the formation of the heterotrimeric complex with the corresponding N-acylated α subunit, α_t, we employed purified fully processed subunits, which are soluble in aqueous solutions without detergents. Pertussis-toxin-mediated [³²P]ADP-ribosylation of α_t is strongly stimulated (≈10-fold) in the presence of βγ_t and can thus serve as a measure for heterotrimer formation. Using this assay, preincubation of α_t with S-prenyl analogues containing farnesyl or geranylgeranyl moieties was found to inhibit heterotrimer formation in a dose-dependent manner. The inhibition was competitive and reversible, as indicated by its reversal upon increase of the βγ_t dimer concentration or by removal of the S-prenyl analogue using gel filtration. The competitive nature of the inhibition is supported by the marked attenuation of the inhibition when the S-prenyl analogue was added to α_t together with or after βγ_t. The inhibition does not involve interaction with the α_t acyl group, since an S-prenyl analogue inhibited the [³²P]ADP-ribosylation of an unlipidated α_t mutant. These data suggest the existence of a hitherto unrecognized S-prenyl-binding site in α_t, which is critical for its interaction with prenylated βγ_t.