Discrete peptide domains within the primary sequence of cell-surface receptor glycoproteins are believed to regulate not only their function but also their targeting to the cell membrane. To identify sequence elements required for intracellular transport and ligand binding by the human Tac interleukin-2 (IL-2) receptor, we prepared expression plasmids encoding a series of artificially mutated or naturally occurring variants of the Tac cDNA. In particular, we sought to further delineate the functional role of the sequences contributed by each of the eight exons that together encode the Tac protein. Deletion of exons 5 through 8 of the receptor had no detectable effect on IL-2 binding or intracellular transport of the Tac protein, and resulted in secreted forms of this IL-2-binding protein. Removal of sequences corresponding to all of exon 4 ablated IL-2 binding activity yet still permitted transport to the cell surface. In contrast, partial deletion of exon 4 sequences resulted in proteins that not only lacked IL-2 binding activity but also were sequestered within the endoplasmic reticulum. Removal of one or both of the N-linked glycosylation sites present in the Tac protein did not impair receptor transport or ligand binding. These results demonstrate that exon 4 of the Tac gene encodes amino acid residues that play an important role in regulating both the intracellular transport and function of this IL-2 receptor.