Rat kidney gamma-glutamyl transpeptidase is composed of two nonidentical glycosylated subunits. The enzyme is localized on the lumenal surface of the brush-border membranes of proximal tubule epithelial cells; it is attached to the membranes via an NH2-terminal segment of the larger of the two subunits. Tissue-labeling experiments followed by immunoprecipitation with antibodies directed against the enzyme and its two subunits demonstrate that a glycosylated single chain precursor (Mr = 78,000), containing the elements of both the subunits, is initially synthesized. Pulse-chase studies in the presence of pactamycin, and inhibitor of protein synthesis initiation, indicate that the larger of the two subunits is located at the NH2 terminus of the Mr = 78,000 precursor. The initial events in the biosynthesis and processing of gamma-glutamyl transpeptidase were investigated by in vitro translation of rat kidney mRNA. Such translation results in the synthesis of a Mr = 63,000 unglycosylated polypeptide which has been shown immunologically to contain the domains for both subunits. The Mr = 63,000 species is processed to a Mr = 78,000 core-glycosylated polypeptide when translation of mRNA is carried out in the presence of dog pancreas microsomes. This processing does not appear to be associated with cleavage of an NH2-terminal leader sequence. The Mr = 78,000 polypeptide is integrated into the microsomal membranes with an orientation that is analogous to that found on the brush-border membranes. Glycosylation and membrane integration of transpeptidase are cotranslational events. Upon longer incubation, the Mr = 78,000 species sequestered within the microsomal vesicles is cleaved to species corresponding in size to the two subunits of the kidney enzyme.