A cDNA was cloned coding for human placental 5'-nucleotidase. The 3547-bp cDNA contains an open reading frame that encodes a 574-residue polypeptide with a calculated size of 63 375 Da. The NH2-terminal 26 residues comprise a signal peptide, which is followed by the NH,-terminal sequence of the purified protein. Four potential N-linked glycosylation sites are found in the molecule, accounting for a larger mass of the mature form (71 kDa). The predicted structure contains a hydrophobic amino acid sequence at the COOH terminus, a possible signal for the post-translational modification by glycophospholipid. To confirm this possibility, we tried to isolate and characterize the membrane-anchoring domain of 5'-nucleotidase. BrCN-cleaved fragments of the protein were extracted with hexane and subjected to HPLC, resulting in purification of a single component of 2.3 kDa. Chemical analyses revealed that the purified fragment contains the tetradecapeptide Lys-Val-Ile-Tyr-Pro-Ala-Val-Glu-GlyArg-Ile-Lys-Phe-Ser, ethanolamine, glucosamine, mannose, inositol, palmitic acid, and stearic acid. The peptide sequence determined is identified at positions 510 -523 in the primary structure deduced from the cDNA sequence, which predicts a further extension to position 548, containing the hydrophobic amino acid sequence. Thus, it is concluded that the mature 5'-nucleotidase lacks the predicted COOH-terminal peptide extension (524 -548), which has been replaced by the glycophospholipid functioning as the membrane anchor of 5'-nucleotidase. The NH2-terminal hydrophobic domain of these enzymes functions as both a translocation signal and membrane anchor (uncleavable signal peptide). On the other hand, recent studies with cloning and sequencing of cDNAs have demonstrated that alkaline phosphatase, another representative ectoenzyme, has a hydrophobic domain at the COOH terminus which could participate in membrane localization [7,8]. However, in purified alkaline phosphatase, the COOH-terminal hydrophobic domain is replaced by a glycosyl-phosphatidylinositol (glycosyl-PtdIns) moiety [9, 101. It is now suggested that the COOH-terminal hydrophobic domain is post-translationally cleaved and replaced by glycosyl-PtdIns for membrane anchoring in many proteins expressed on the cell surface [ l l , 121.