Using recombinant DNA techniques, we have constructed phoA-lacZ gene fusions. Two of the fusions encode hybrid proteins containing approximately half of alkaline phosphatase at the amino terminus joined to beta-galactosidase. For the one fusion strain analyzed in detail, it was shown that the hybrid protein is found in the membrane fraction of cells. In its membrane location, the beta-galactosidase activity of the hybrid is not sufficient to support cell growth on lactose. Unexpectedly, fusions containing phoA and lacZ joined in the wrong translational reading frame were also obtained. These fusions direct the phosphate-regulated synthesis of beta-galactosidase, apparently via a translation restart mechanism. Thus, when gene fusions are constructed, the presence of properly regulated beta-galactosidase activity does not necessarily indicate that a hybrid protein is being produced.