One isoform of trehalase, TreF, is present in the cytoplasm and a second, TreA, in the periplasm. To study the questions of why one enzyme is exported efficiently and the other is not and whether these proteins can fold in their nonnative cellular compartment, we fused the signal sequence of periplasmic TreA to cytoplasmic TreF. Even though this TreF construct was exported efficiently to the periplasm, it was not active. It was insoluble and degraded by the periplasmic serine protease DegP. To determine why TreF was misfolded in the periplasm, we isolated and characterized Tre ؉ revertants of periplasmic TreF. To further characterize periplasmic TreF, we used a genetic selection to isolate functional TreA-TreF hybrids, which were analyzed with respect to solubility and function. These data suggested that a domain located between residues 255 and 350 of TreF is sufficient to cause folding problems in the periplasm. In contrast to TreF, periplasmic TreA could fold into the active conformation in its nonnative cellular compartment, the cytoplasm, after removal of its signal sequence.Secretory and cytoplasmic proteins differ not only by the signal sequence but also in their folding properties. It is thought that the export competence of secretory proteins is the result of slow folding prior to export. Cytoplasmic proteins are believed to fold more rapidly and thus are not substrates of the cellular secretion apparatus. For a better understanding of the mechanism of translocation, the folding of cytoplasmic and secretory proteins needs to be characterized. Folding of polypeptides is determined by the primary amino acid sequence but also could be influenced by the particular properties of a cellular compartment. However, little is known about whether and how the cytoplasm and the periplasm specifically influence protein folding, i.e. whether there are other elements besides redox state and the presence/absence of ATP. To study these aspects, we used TreA and TreF, the two trehalases of Escherichia coli, as model proteins.Periplasmic TreA is synthesized as a precursor of 565 amino acids. The signal sequence of 30 amino acids is rather long.Mature TreA has a molecular mass of 58 kDa (1, 2). The K m of the purified enzyme is 0.8 mM, the V max is 66 mol of trehalose hydrolyzed/min/mg of protein, and the pH optimum is 5.5 (3). The expression of treA is independent of the presence of trehalose in the growth medium but is stimulated 10-fold at high osmolarity (1, 2). Also, treA is regulated by RpoS, the stationary phase sigma factor (4).Cytoplasmic TreF has 549 amino acids and a molecular mass of 64 kDa. The K m of the purified enzyme is 1.9 mM, the V max is 54 mol of trehalose hydrolyzed/min/mg of protein, and the pH optimum is 6.0. Like treA,