The yeast Pdr5 multidrug transporter is an important member of the ATP-binding cassette superfamily of proteins. We describe a novel mutation (S558Y) in transmembrane helix 2 of Pdr5 identified in a screen for suppressors that eliminated Pdr5-mediated cycloheximide hyper-resistance. Nucleotides as well as transport substrates bind to the mutant Pdr5 with an affinity comparable with that for wild-type Pdr5. Wild-type and mutant Pdr5s show ATPase activity with comparable K(m)((ATP)) values. Nonetheless, drug sensitivity is equivalent in the mutant pdr5 and the pdr5 deletion. Finally, the transport substrate clotrimazole, which is a noncompetitive inhibitor of Pdr5 ATPase activity, has a minimal effect on ATP hydrolysis by the S558Y mutant. These results suggest that the drug sensitivity of the mutant Pdr5 is attributable to the uncoupling of NTPase activity and transport. We screened for amino acid alterations in the nucleotide-binding domains that would reverse the phenotypic effect of the S558Y mutation. A second-site mutation, N242K, located between the Walker A and signature motifs of the N-terminal nucleotide-binding domain, restores significant function. This region of the nucleotide-binding domain interacts with the transmembrane domains via the intracellular loop-1 (which connects transmembrane helices 2 and 3) in the crystal structure of Sav1866, a bacterial ATP-binding cassette drug transporter. These structural studies are supported by biochemical and genetic evidence presented here that interactions between transmembrane helix 2 and the nucleotide-binding domain, via the intracellular loop-1, may define at least part of the translocation pathway for coupling ATP hydrolysis to drug transport.