The less abundant subunit of the asialoglycoprotein receptor, H2, may be encoded by at least four variant transcripts as a result of alternative mRNA splicing. We had cloned two H2-cDNAs that differed predominantly by the presence (clone H2') or absence (clone L-H2) of two presumed exons; one of 57 nucleotides was near the 5' end of the sequence, and the other was within the transmembrane region consisting of 15 nucleotides. The relevance of these two segments to H2 processing was studied after expression in rat-6 fibroblasts of these two isolates and of artificial constructs containing either only the 57-nucleotide (transfectant-57) or the 15-nucleotide (transfectant-15) region. H2 proteins encoded by cDNAs containing the 15-nucleotide region were intracellularly retained and degraded independently of the presence of the 57-nucleotide sequence. Of proteins derived from clones lacking the 15-nucleotide region, only a fraction was processed through the trans-Golgi, as evidenced by sensitivity to O-glycanase and neuraminidase, and reached the cell surface. The presence of the 57-nucleotide sequence was necessary for protein phosphorylation. Phosphorylation of serine residue(s) was detected in the endoglycosidase H-sensitive and mature forms of H2 protein encoded by transfectant-57. Since the 57-nucleotide region does not encode for serine residues, it per se cannot be the site of phosphorylation but rather constitutes a regulatory element for post-translational modification.