Rabbit neutral endopeptidase-24.11 is a type II transmembrane protein with a 27-amino acid residue positively charged NH2-terminal cytoplasmic domain, a 23-amino acid residue hydrophobic signal peptide/membrane anchor domain, and a large catalytic COOH-terminal domain exposed on the exoplasmic side of the membrane. In order to study the mechanism of membrane anchoring of neutral endopeptidase-24.11, we created mutants in which the cytoplasmic tail was deleted. Expression of these mutants in COS-1 cells resulted in the secretion of approximately 10-20% of the protein into the culture medium, due possibly to the cleavage of part or all of the signal peptide/membrane anchor domain by the rough endoplasmic reticulum signal peptidase. In a second set of mutants, a hydrophilic sequence (GSQNS) was inserted midway in the signal peptide/membrane anchor domain of neutral endopeptidase-24.11. When this hydrophilic sequence was introduced into the full-length neutral endopeptidase-24.11, approximately 20% of the enzyme activity was recovered in the culture medium. This proportion increased to 93% when the cytosolic tail was deleted. Sequencing of the [3H]tyrosine- or [3H]isoleucine-labeled secreted protein indicated that proteolysis, possibly by signal peptidase, occurred on the COOH-terminal side of the signal peptide/membrane anchor domain. We conclude that the efficient cleavage of the signal peptide/membrane anchor domain and secretion of the protein require both the deletion of the cytosolic domain and the presence of a hydrophilic sequence.