The N-terminal portion of phosphodiesterase (PDE) 3 was arbitrarily divided into region 1 (amino acids 1-300), which contains a large hydrophobic domain with six predicted transmembrane helices, and region 2 (amino acids 301-500), with a smaller hydrophobic domain (ϳ50 residues). To analyze these regions, full-length human (H)PDE3A and mouse (M)PDE3B and a series of N-terminal truncated mutants were synthesized in Sf9 cells. Activities of HPDE3A, H3A-⌬189, MPDE3B, and M3B-⌬196, which retained all or part of the hydrophobic domain in region 1, were recovered almost entirely in particulate fractions. H3A-⌬321 and M3B-⌬302, containing region 2, were recovered essentially equally in particulate and cytosolic fractions. H3A-⌬397 and H3A-⌬457, lacking both hydrophobic domains, were predominantly cytosolic. H3A-⌬510 and M3B-⌬604, lacking both regions 1 and 2, were virtually completely cytosolic. M3B-⌬196 eluted as a large aggregated complex during gel filtration. With removal of greater amounts of N-terminal sequence, aggregation of PDE3 decreased, and H3A-⌬607, H3A-⌬721, and M3B-⌬604 eluted as dimers. Truncated HPDE3A proteins were more sensitive than full-length HPDE3A to inhibition by lixazinone. These results suggest that the hydrophobic domains in regions 1 and 2 contain structural determinants important for association of PDE3 with intracellular membranes, as well for self-association or aggregation during gel filtration and sensitivity to a specific inhibitor.