The rice (Oryza sativa) gene Xa27 confers resistance to Xanthomonas oryzae pv oryzae, the causal agent of bacterial blight disease in rice. Sequence analysis of the deduced XA27 protein provides little or no clue to its mode of action, except that a signal-anchor-like sequence is predicted at the amino (N)-terminal region of XA27. As part of an effort to characterize the biochemical function of XA27, we decided to determine its subcellular localization. Initial studies showed that a functional XA27-green fluorescent protein fusion protein accumulated in vascular elements, the host sites where the bacterial blight pathogens multiply. The localization of XA27-green fluorescent protein to the apoplast was verified by detection of the protein on cell walls of leaf sheath and root cells after plasmolysis. Similarly, XA27-FLAG localizes to xylem vessels and cell walls of xylem parenchyma cells, revealed by immunogold electron microscopy. XA27-FLAG could be secreted from electron-dense vesicles in cytoplasm to the apoplast via exocytosis. The signal-anchor-like sequence has an N-terminal positively charged region including a triple arginine motif followed by a hydrophobic region. Deletion of the hydrophobic region or substitution of the triple arginine motif with glycine or lysine residues abolished the localization of the mutated proteins to the cell wall and impaired the plant's resistance to X. oryzae pv oryzae. These results indicate that XA27 depends on the N-terminal signal-anchor-like sequence to localize to the apoplast and that this localization is important for resistance to X. oryzae pv oryzae.