The protozoan Giardia lamblia is an obligate parasite of the mammalian small intestine. We studied the expression of a gene that encodes a protein component of the cyst wall, a complex structure assembled during the differentiation of trophozoites to cysts and which is critical to survival of the parasite outside its mammalian host. Transcripts from the cyst wall protein gene increase more than 100-fold during encystation, reaching a maximum between 5 and 24 hours after induction. Cyst wall protein expression also increases dramatically during encystation, and, prior to its incorporation into the nascent cyst wall, the protein is contained within the encystation-specific vesicles of encysting trophozoites. The sequence of the cloned gene predicts an acidic, leucine-rich polypeptide of M(r) 26,000 that contains 5.3 tandemly arranged copies of a degenerate 24-amino-acid repeat. A hydrophobic amino-terminal peptide probably serves as the initial signal that targets this protein to a secretory pathway involving vesicular localization during encystation and, ultimately, secretion to form the cyst wall.