The purified Escherichia coli cytochrome bo3 ubiquinol oxidase contains four subunits that are each integral components of the cytoplasmic membrane. The molecular weight of each of the subunits has been determined by matrix-assisted laser desorption ionization mass spectrometry (MALDI). The observed molecular weight of subunit II (CyoA) is considerably less than the calculated value from the deduced amino acid sequence, indicating possible posttranslational processing. The similarity of a portion of the sequence near the N-terminus of CyoA with the sequences of known prokaryotic membrane-bound lipoproteins suggested that CyoA is proteolytically processed to generate an N-terminus at Cys25, and that Cys25 is covalently modified by the addition of lipids. This would be consistent with the observed molecular mass, and was confirmed by demonstrating the incorporation of radioactive palmitic acid into subunit II of the cytochrome bo3 oxidase. Site-directed mutagenesis replacing Cys25 by alanine prevents the processing, generating a precursor form of CyoA with a higher molecular mass. The C25A mutant of CyoA still assembles as an active quinol oxidase capable of supporting growth of the cells by aerobic respiration. Hence, this unusual processing of a cytoplasmic membrane protein, which is already anchored to the membrane by two transmembrane helices, is not essential for either assembly or function.