The Ure2 protein of Saccharomyces cerevisiae can become a prion (infectious protein). At very low frequencies Ure2p forms an insoluble, infectious amyloid known as [URE3], which is efficiently transmitted to progeny cells or mating partners that consequently lose the normal Ure2p nitrogen regulatory function. The [URE3] prion causes yeast cells to grow slowly, has never been identified in the wild, and confers no obvious phenotypic advantage. An N-terminal asparagine-rich domain determines Ure2p prion-forming ability. Since ure2Delta strains are complemented by plasmids that overexpress truncated forms of Ure2p lacking the prion domain, the existence of the [URE3] prion and the evolutionary conservation of an N-terminal extension have remained mysteries. We find that Ure2p function is actually compromised in vivo by truncation of the prion domain. Moreover, Ure2p stability is diminished without the full-length prion domain. Mca1p, like Ure2p, has an N-terminal Q/N-rich domain whose deletion reduces its steady-state levels. Finally, we demonstrate that the prion domain may affect the interaction of Ure2p with other components of the nitrogen regulation system, specifically the negative regulator of nitrogen catabolic genes, Gzf3p.