The yeast SUC2 gene codes for the secreted enzyme invertase. A series of 16 different-sized gene fusions have been constructed between this yeast gene and the Escherichia coli lacZ gene, which codes for the cytoplasmic enzyme ,-galactosidase. Various amounts of SUC2 NH2-terminal coding sequence have been fused in frame to a constant COOH-terminal coding segment of the lacZ gene, resulting in the synthesis of hybrid invertase-,3-galactosidase proteins in Saccharomyces cerevisiae. The hybrid proteins exhibit j8-galactosidase activity, and they are recognized specifically by antisera directed against either invertase or ,3-galactosidase. Expression of ,-galactosidase activity is regulated in a manner similar to that observed for invertase activity expressed from a wild-type SUC2 gene: repressed in high-glucose medium and derepressed in low-glucose medium. Unlike wildtype invertase, however, the invertase-pi-galactosidase hybrid proteins are not secreted. Rather, they appear to remain trapped at a very early stage of secretory protein transit: insertion into the endoplasmic reticulum (ER). The hybrid proteins appear only to have undergone core glycosylation, an ER process, and do not receive the additional glycosyl modifications that take place in the Golgi complex. Even those hybrid proteins containing only a short segment of invertase sequences at the NH2 terminus are glycosylated, suggesting that no extensive folding of the invertase polypeptide is required before initiation of transmembrane transfer. D-Galactosidase activity expressed by the SUC2-lacZ gene fusions cofractionates on Percoll density gradients with ER marker enzymes and not with other organelles. In addition, the hybrid proteins are not accessible to cell-surface labeling by 1251. Accumulation of the invertase-jl-galactosidase hybrid proteins within the ER does not appear to confer a growth-defective phenotype to yeast cells. In this location, however, the hybrid proteins and the 0-galactosidase activity they exhibit could provide a useful biochemical tag for yeast ER membranes.Protein secretion in Saccharomyces cerevisiae is mediated by the same set of organelle intermediates employed by higher eucaryotes. Proteins destined for secretion are initially cotranslationally translocated into the endoplasmic reticulum (ER) lumen, where they receive N-glycosidically-linked core oligosaccharides (4,33,36 endogenous ,B-galactosidase activity) (17,20,26,32,35,39). Such gene fusions have been used extensively to study the regulation of gene expression in S. cerevisiae. We attempted to extend the use of the E. coli lacZ gene in S. cerevisiae to study the yeast secretory pathway.The yeast SUC2 gene codes for the sucrose-cleaving enzyme invertase. This gene encodes two distinct mRNAs: a larger mRNA that carries an additional sequence and its 5' end (containing the coding sequence for the 19-amino-acid signal peptide of invertase) which directs the synthesis of secreted invertase and a smaller mRNA lacking this sequence which directs the synthesis of a cytoplasm...