A detailed understanding of the mechanism of lipid transport in insects has been hampered by the inability to identify the proapolipophorin gene that encodes apolipophorins I and II, the principal protein components of lipophorin, the lipid transport vehicle. Here we provide the first molecular description of the Drosophila gene encoding a retinoid- and fatty acid-binding glycoprotein (RFABG) and present evidence that it is a member of the proapolipophorin gene family. The gene, localized to the chromosome 4 (102 F region), encodes a 3351-amino acid protein that could serve as the precursor for the approximately 70-kDa and >200-kDa polypeptides associated with RFABG. The N-terminal sequence of the approximately 70-kDa polypeptide and that predicted for the >200-kDa polypeptide showed high sequence similarity to blowfly apolipophorin II and apolipophorin I, respectively. The RFABG precursor contains a signal peptide and exhibits a multidomain mosaic protein structure, which is typical of extracellular proteins. It has structural domains similar to lipid-binding proteins, namely vitellogenins and apolipoprotein B. The protein also contains a domain similar to the D domain of von Willebrand factor and mucin. The gene is expressed in the Drosophila embryo during development in cells that make up the amnioserosa and fat bodies. Immunolocalizations using specific antibodies against RFABG reveal that the protein is initially dispersed through the embryonic amnioserosa sac and latter concentrated at skeletal muscle-epidermis apodemeal contact junctions during larval development. This novel gene may play an important role in the transport of lipids, including retinoids and fatty acids, in insects.