UDP-N-acetylglucosamine: beta-D-mannoside beta-1,4N-acetylglucosaminyltransferase III (GnT-III, EC 2.4.1.144) is a glycoprotein involved in the biosynthesis of N-linked oligosaccharides. Rat GnT-III contains three potential N-glycosylation sites, which have been predicted to be Asn243, Asn261, and Asn399. To study the roles of N-glycosylation in the GnT-III function, rat GnT-III was expressed in COS-1 cells under tunicamycin or castanospermine treatment. The tunicamycin-treated GnT-III, which was not N-glycosylated, had almost no activity. The castanospermine-treated GnT-III was not localized in the Golgi, but glucosylation did not affect its activity. To clarify the role of individual N-glycosylations, we obtained a series of mutant cDNAs in which some or all of the potential glycosylation sites were eliminated by site-directed mutagenesis, and expressed them in COS-1 cells. All the mutants exhibited lower enzyme activity than the wild-type, but deglycosylation at individual sites had different effects on the enzyme activity. The deglycosylation at Asn243 or Asn261 was more effective on the activity than that at Asn399. The enzyme activity decreased as the number of glycosylation sites decreased. The null glycosylation mutant had no activity, corresponding to the case of tunicamycin-treated wild-type GnT-III. Kinetic analysis revealed that the deglycosylation at Asn243 or Asn261 resulted in slightly lower affinity for the donor substrate, but the other mutation did not significantly change the K(m) value for either the donor or acceptor. None of the mutant GnT-IIIs showed perinuclear localization or Golgi retention, that was observed for the wild-type protein. This is the first demonstration that the glycosyltransferase localized in the Golgi apparatus requires N-glycosylation for its activity and retention.