Yeast squalene synthetase which has been truncated by 24 amino acids at the C-terminus has been overexpressed in Escherichia coli and constitutes approximately 20% of the total soluble cell protein. For the first time, milligram quantities of this essential enzyme in the cholesterol biosynthetic pathway have been purified to near homogeneity by ammonium sulfate precipitation and Mono Q anion-exchange chromatography so that the steady-state rate constants could be measured. A combination of 10% methanol, 10% glycerol, 30 mM octyl-beta-D-glucopyranoside, 0.4% Brij-58, and 1 mM dithiothreitol in 25 mM sodium phosphate, pH 7.4, was essential for the stability and maximal enzyme activity of the near homogeneous enzyme. Kinetic analysis indicated a Km for farnesyl pyrophosphate of 2.5 microM, suggesting fairly tight binding of farnesyl pyrophosphate to truncated yeast squalene synthetase. The turnover number, kcat, for the conversion of farnesyl pyrophosphate to squalene was 0.53 s-1, and the apparent second order rate constant, kcat/Km, was 2.1 x 10(5) M-1 s-1, indicating a relatively slow conversion of farnesyl pyrophosphate to squalene and a low specificity constant for this enzyme. In addition, Km for NADPH and NADH was 0.5 and 3.6 mM, respectively. Moreover, truncated yeast squalene synthetase shows a preference for NADPH over NADH as reflected in the sevenfold higher kcat/Km value for NADPH similar to that for the native enzyme.