In opium poppy (Papaver somniferum L.), (S)-reticuline is the last common intermediate in sanguinarine and morphine biosynthesis. Sanguinarine accumulates in the vacuole of cultured opium poppy cells in response to treatment with fungal elicitors. The first committed step in sanguinarine biosynthesis is catalyzed by the berberine bridge enzyme (BBE), which converts (S)-reticuline to (S)-scoulerine. An N-terminal signal peptide and novel vacuolar sorting determinant were identified and characterized in BBE. In vitro translation of BBE mRNA in the presence of canine pancreatic microsomes produced a glycosylated, proteolysis-resistant protein, confirming the existence of a signal peptide. Transcripts encoding a BBE N-terminal deletion series fused to beta-glucuronidase or green fluorescent protein (GFP) were also translated in the presence of canine microsomes, and introduced into cultured opium poppy cells via microprojectile bombardment. The signal peptide was restricted to the first 25 amino acids and shown to initially target BBE to the endoplasmic reticulum. Fusion of 50 N-terminal residues from BBE to GFP resulted in the localization of the reporter to the vacuole. GFP was also sorted to the vacuole when fused to a heterologous N-terminal signal peptide followed by BBE amino acids 26-50. The BBE vacuolar sorting determinant was further localized between residues 26 and 41 by deletion analysis. The final subcellular destination of BBE is consistent with the vacuolar sequestration of sanguinarine. However, the vacuolar pH is below the functional range for BBE, suggesting that the enzyme is active only prior to its entry into the vacuole.