The biosynthesis of gamma-glutamyl transpeptidase was investigated in hepatoma tissue culture cells. Pulse-chase experiments using [35S]methionine labeling have shown that the two glycosylated subunits of the enzyme (Mr = 58,000 and 29,000) derive from a single glycosylated precursor (Mr = 79,000 at early times). Only one polypeptide chain was immunoprecipitated from cell-free translation products and was shown to correspond to the nonglycosylated precursor (Mr = 64,000). Treatment with endoglycosidase H was used to probe for the transfer of the proteins from the endoplasmic reticulum to the Golgi and demonstrated: (i) that the precursor is at least partially cleaved in the endoplasmic reticulum; (ii) that part of the precursor is transferred to the Golgi where the processing of the oligosaccharide chains takes place. None of the precursor forms were detected at the surface of the cell where the mature enzyme was found. Tunicamycin, an inhibitor of protein glycosylation, did not prevent the proteolytic processing of the enzyme, but delayed the appearance of the mature enzyme at the cell surface. Monensin, which is known to alter Golgi functions, significantly delayed the acquisition of complex type oligosaccharides and the appearance of the enzyme at the cell surface. It did not, however, alter the proteolytic processing of the precursor of gamma-glutamyl transpeptidase. Taken together, these results show that gamma-glutamyl transpeptidase is synthetized as a single precursor which is at least partially cleaved in the endoplasmic reticulum. Part of the precursor is transferred to the Golgi where its oligosaccharide chains are processed.