To investigate putative sorting domains in precursors to polypeptide hormones, we have constructed fusion proteins between the amino terminus of preproinsulin (ppI) and the bacterial cytoplasmic enzyme chloramphenicol acetyltransferase (CAT). Our aim is to identify sequences in ppI, other than the signal peptide, that are necessary to mediate the intracellular sorting and secretion of the bacterial enzyme. Here we describe the in vitro translation of mRNAs encoding two chimeric molecules containing 71 and 38 residues, respectively, of the ppI NH2 terminus fused to the complete CAT sequence. The ppI signal peptide and 14 residues of the B-chain were sufficient to direct the translocation and segregation of CAT into microsomal membrane vesicles. Furthermore, the CAT enzyme underwent N-linked glycosylation, presumably at a single cryptic site, with an efficiency that was comparable to that of native glycoproteins synthesized in vitro. Partial amino-terminal sequencing demonstrated that the downstream sequences in the fusion proteins did not alter the specificity of signal peptidase, hence cleavage of the ppI signal peptide occurred at precisely the same site as in the native precursor. This is in contrast to results found in prokaryotic systems. These data demonstrate that the first 38 residues of ppI encode all the information necessary for binding to the endoplasmic reticulum membrane, translocation, and proteolytic (signal sequence) processing.