Cells of the budding yeast undergo oriented cell division by choosing a specific site for growth depending on their cell type. Haploid a and alpha cells bud in an axial pattern whereas diploid a/alpha cells bud in a bipolar pattern. The Ras-like GTPase Rsr1p/Bud1p, its GDP-GTP exchange factor Bud5p, and its GTPase-activating protein Bud2p are essential for selecting the proper site for polarized growth in all cell types. Here we showed that specific residues at the N terminus and the C terminus of Bud5p were important for bipolar budding, while some residues were involved in both axial and bipolar budding. These bipolar-specific mutations of BUD5 disrupted proper localization of Bud5p in diploid a/alpha cells without affecting Bud5p localization in haploid alpha cells. In contrast, Bud5p expressed in the bud5 mutants defective in both budding patterns failed to localize in all cell types. Thus, these results identify specific residues of Bud5p that are likely to be involved in direct interaction with spatial landmarks, which recruit Bud5p to the proper bud site. Finally, we found a new start codon of BUD5, which extends the open reading frame to 210 bp upstream of the previously estimated start site, thus encoding a polypeptide of 608 amino acid residues. Bud5p with these additional N-terminal residues interacted with Bud8p, a potential bipolar landmark, suggesting that the N-terminal region is necessary for recognition of the spatial cues.