The Saccharomyces cerevisiae Mms4 and Mus81 proteins form a specific complex, which functions as an endonuclease specific for branched DNA molecules and protects cells from killing by DNA alkylation damage, but not damage induced by ionizing radiations. In an effort to further understand the structure and functions of the Mus81-Mms4 complex, we attempted to define domains required for complex formation and nuclear localization through deletion and mutagenesis analyses. Combined yeast two-hybrid and co-immunoprecipitation experiments indicate that the C-terminal 100 amino acids of both Mus81 and Mms4 are required and sufficient for heterodimer formation. However, a single amino acid substitution in Mms4 in the N-terminal region is able to abolish the interaction, which suggests that the three-dimensional structure is also important for Mms4 to interact with Mus81. By fusion to green fluorescent protein and in vivo subcellular localization studies, we demonstrate that Mms4 and Mus81 are nuclear proteins and can be localized to the nucleus independently. Deletion analyses indicate that one of two putative nuclear localization signals (residues 244-263) in Mms4 is required for localization, whereas the N-terminal half of Mus81 is necessary and sufficient for its localization to the nucleus.