Identification of the novel PE multigene family was an unexpected finding of the genomic sequencing of Mycobacterium tuberculosis. Presently, the biological role of the PE and PE_PGRS proteins encoded by this unique family of mycobacterial genes remains unknown. In this report, a representative PE_PGRS gene (Rv1818c/PE_PGRS33) was selected to investigate the role of these proteins. Cell fractionation studies and fluorescence analysis of recombinant strains of Mycobacterium smegmatis and M. tuberculosis expressing green fluorescent protein (GFP)-tagged proteins indicated that the Rv1818c gene product localized in the mycobacterial cell wall, mostly at the bacterial cell poles, where it is exposed to the extracellular milieu. Further analysis of this PE_PGRS protein showed that the PE domain is necessary for subcellular localization. In addition, the PGRS domain, but not PE, affects bacterial shape and colony morphology when Rv1818c is overexpressed in M. smegmatis and M. tuberculosis. Taken together, the results indicate that PE_PGRS and PE proteins can be associated with the mycobacterial cell wall and influence cellular structure as well as the formation of mycobacterial colonies. Regulated expression of PE genes could have implications for the survival and pathogenesis of mycobacteria within the human host and in other environmental niches.