Expression of fusion proteins between prepro-alpha-factor and somatostatin (SRIF) in yeast, resulted in the correct processing and secretion of the heterologous 14-amino acid SRIF peptide (1). When the chimeric genes were placed under the control of yeast acid phosphatase (PHO5) promoter, significant amount of an unglycosylated form of the fusion precursor molecule accumulated intracellularly, suggesting disruption of an endoplasmic reticulum-mediated function. We report here that the appearance of the precursor is due to an alteration in the three amino terminal residues of the chimera, i.e., Met-Arg-Phe in native prepro-alpha-factor is changed to Met-Phe-Lys in the hybrids. The unglycosylated precursor represents a population of molecules that are disrupted at an early stage of targeting to or translocation across the endoplasmic reticulum membrane. Our data demonstrate that the N-terminus plays an important role in topogenesis. Furthermore, these results show that translocation and glycosylation can be uncoupled from protein synthesis in vivo, and therefore can be posttranslational events in yeast.