Due to its strength and specificity, the interaction between avidin and biotin has been used in a variety of scientific and medical applications ranging from immunohistochemistry to drug targeting. The present study describes two methods for biotinylation of proteins secreted from eukaryotic cells using the Escherichia coli biotin protein ligase. In one system the biotin ligase was co-secreted from the cells along with substrate protein enabling extracellular biotinylation of the tagged protein. In the other system, biotin ligase was engineered to be retained in the endoplasmic reticulum (ER) and metabolically biotinylates the secretory protein as it passes through the ER. An engineered antibody fragment, a diabody with specificity for carcinoembryonic antigen (CEA) was fused to the biotin acceptor domain (123 amino acid) of Propionibacterium shermanii. Coexpression of the fusion protein with ER retained biotin ligase showed higher biotinylation efficiency than biotinylation by co-secreted ligase. Biotinylation of the anti-CEA diabody tagged with a short (15 amino acid, Biotin Avitag) biotin acceptor peptide was also successful. Utilization of ER retained biotin ligase for biotinylation of protein is an attractive alternative for efficiently producing uniformly biotinylated recombinant proteins for a variety of avidin-biotin technologies.