We demonstrated the invagination of transferrin into reticulocyte plasma membrane to learn whether membrane-bound transglutaminase (TGase, a Ca(2+)-dependent enzyme) is involved in this invagination. The invagination was assessed by acid-resistance assay and antibody-inaccessibility assay. The invagination was blocked in the absence of ATP. [14C]Putrescine, a substrate for TGase, was incorporated into the membrane during the invagination. This incorporation was decreased in the absence of ATP or transferrin and was completely blocked in the presence of monodansylcadaverine or EGTA. The TGase inhibitor and EGTA also decreased the invagination. In the sodium dodecyl sulfate-polyacrylamide gel electrophoresis (SDS-PAGE) analysis, the labeling of 43 kDa membrane protein with [14C]putrescine and the increase in aggregation of proteins were observed in a transferrin-, ATP- and Ca(2+)-dependent manner. These results provide the first evidence for modification of protein by TGase accompanying the invagination of transferrin into the membrane, and suggest that membrane-bound TGase is involved in the invagination step of endocytosis.