Exposed thiols act as intracellular retention elements for unassembled secretory molecules. Yet, some free Ig lambda light chains are secreted despite the presence of an unpaired cysteine (Cys214). This is due largely to the presence of a flanking acidic residue: substitution of Asp213 for Gly or Lys increases pre-Golgi retention and degradation of free lambda. Secretion is restored by exogenous reducing agents or by assembly with heavy chains. In the endoplasmic reticulum (ER), lambda chains form covalent complexes with many proteins through Cys214. These complexes are absent from the Golgi. They are more abundant in transfectants expressing the lambdaGly2I3 and lambdaLys213 mutants that are poorly secreted. Radioactive N-ethylmaleimide labels some monomeric lambda chains isolated from the ER, but not from the Golgi or from the medium, indicating that the Cys214 thiol is masked during ER-Golgi transport. Mass spectrometry reveals the presence of a free cysteine residue disulfide-linked to Cys214. We suggest that thiol-mediated retention involves the formation of reversible disulfide bonds with the protein matrix of the ER. The presence of an acidic residue next to the critical cysteine may allow the masking of the thiol and transport to the Golgi.