Advances in expressed protein ligation (EPL) methods that permit specific introduction of unique modifications into proteins have facilitated protein engineering, structure-function and protein interaction studies. An EPL-generated hybrid exchangeable apolipoprotein has been constructed from recombinant fragments of apolipoprotein E (apoE) and apolipophorin III (apoLp-III). A recombinant fusion protein comprised of human apoE N-terminal residues 1-111, a modified Saccharomyces cerevisiae intein and a chitin binding domain was subjected to 2-mercaptoethanesulfonic acid (MESNA) induced cleavage to generate apoE(1-111)-MESNA. A second fusion protein was comprised of a bacterial pelB leader peptide fused to a variant form of Galleria mellonella apoLp-III residues 1-91. The N-terminal pelB leader sequence directed the newly synthesized fusion protein to the Escherichia coli perisplamic space where endogenous leader peptidase cleavage generated the desired N-terminal cysteine-containing protein fragment. The resulting apoLp-III fragment, which contained no sequence tags or tails, escaped the bacteria and accumulated in the culture medium. When cultured in M9 minimal medium, Asp1Cys apoLp-III(1-91) was produced in high yield and was the sole major protein in the culture supernatant. Ligation reactions with apoE(1-111)-MESNA yielded an engineered hybrid apolipoprotein. The results document the utility of the pelB fusion protein system for generating active N-terminal cysteine containing proteins for EPL applications.