The physiological significance of thiaminase II, which catalyzes the hydrolysis of thiamin, has remained elusive for several decades. The expression of THI20 gene family (THI20/21/22) and PET18 gene of Saccharomyces cerevisiae is induced when the supply of thiamin is limited. The N-terminal domain of THI20 encodes 2-methyl-4-amino-5-hydroxymethylpyrimidine (HMP) kinase and HMP-phosphate kinase involved in the thiamin synthetic pathway. On the other hand, the C-terminal domains of THI20 family proteins and the whole region of PET18 gene product are homologous to bacterial thiaminase II. We demonstrated that yeast thiaminase II activity is exclusively encoded by THI20. The THI20 gene product was found to effectively hydrolyze 2-methyl-4-amino-5-aminomethylpyrimidine, a presumed naturally occurring thiamin precursor, and phosphorylate the resultant HMP to give HMP pyrophosphate. We propose that the thiaminase II activity encoded by THI20 is involved in the thiamin salvage pathway by catalyzing the hydrolysis of HMP precursors in S. cerevisiae.