In an attempt to study the pituitary adenylate cyclase-activating polypeptide (PACAP) type 1 (PAC(1)) receptor (PAC(1)R) function in vivo and to produce a mouse model with altered expression of PAC(1)R, we have used gene targeting in embryonic stem cells to disrupt exon 2 of the PAC(1)R gene, which contains the ATG translation start site and the signal peptide. Un-expectedly, active transcription of PAC(1)R mRNA was detected in the mutant mice; however, exon 1 was spliced to exon 3 (skipping exon 2), and (125)I-PACAP27 binding in brain was greatly reduced. PAC(1)R exon 2(-/-) mice were viable, fertile, and morphologically and histologically indistinguishable from their wild-type counterparts. We next examined the ligand binding and cell surface expression of the mutant receptor lacking the signal peptide in transfected COS-7 cells. (125)I-PACAP27 binding of the mutant receptor was approximately one-tenth of that in the wild-type receptor. Although the wild-type receptor was expressed abundantly in both the plasma membrane and the cytoplasm around the nucleus, the mutant receptor was expressed in the plasma membrane with a markedly reduced level. Digestion of the membranes with endoglycosidase F greatly reduced the size of the wild-type receptor but only slightly reduced that of the mutant receptor. These results demonstrate that the signal peptide is required for efficient cell surface expression and N-linked glycosylation of the PAC(1)R. However, the mutant receptors still functionally coupled to adenylate cyclase in COS-7 cells, suggesting the presence of sufficient spare receptors such that the mutant receptors are capable of activating the second messenger system. We suggest that the mutant mice with markedly reduced PAC(1)R expression can serve as a useful animal model or cell culture system for further studies in PAC(1)R function.