A nucleotide pyrophosphatase/phosphodiesterase (NPP) activity that catalyzes the hydrolytic breakdown of ADP-glucose (ADPG) has been shown to occur in the plastidial compartment of both mono-and dicotyledonous plants. To learn more about this enzyme, we purified two NPPs from rice (Oryza sativa) and barley (Hordeum vulgare) seedlings. Both enzymes are glycosylated, since they bind to concanavalin A, stain with periodic acid-Schiff reagent, and are digested by Endo-H. A complete rice NPP cDNA, designated as NPP1, was isolated, characterized, and overexpressed in transgenic plants displaying high ADPG hydrolytic activity. Databank searches revealed that NPP1 belongs to a functionally divergent group of plant nucleotide hydrolases. NPP1 contains numerous N-glycosylation sites and a cleavable hydrophobic signal sequence that does not match with the N-terminal part of the mature protein. Both immunocytochemical analyses and confocal fluorescence microscopy of rice cells expressing NPP1 fused with green fluorescent protein (GFP) revealed that NPP1-GFP occurs in the plastidial compartment. Brefeldin A treatment of NPP1-GFP-expressing cells prevented NPP1-GFP accumulation in the chloroplasts. Endo-H digestibility studies revealed that both NPP1 and NPP1-GFP in the chloroplast are glycosylated. Collectively, these data demonstrate the trafficking of glycosylated proteins from the endoplasmic reticulum-Golgi system to the chloroplast in higher plants.