When beta-lactamase was fused with the signal peptide plus the amino-terminal 9 amino acid residues of the major outer membrane lipoprotein, the resultant lipo-beta-lactamase (LL-1) was shown to be localized to the outer membrane. However, when the 9 residue sequence was replaced with the amino-terminal 12 residue sequence of lipoprotein-28, an inner membrane protein, the resultant lipo-beta-lactamase (LL-2) was found exclusively in the inner membrane. The localization of LL-2 was shifted to the outer membrane simply by substituting the second amino acid residue (Asp) of LL-2 with Ser. Conversely, the alteration of the second residue (Ser) of LL-1 to Asp resulted in the localization of LL-1 to the inner membrane. These results suggest that the second amino acid residue of the lipoproteins plays a crucial role in determining their final locations in the E. coli envelope.