INTRODUCTIONThe bacterial cell envelope is of major significance as the focal point for interaction between the bacterium and its environment, notably the host in the case of bacterial pathogens. Bacterial cell envelope proteins thus carry out numerous important functions including roles in adhesion, nutrient acquisition and a variety of interactions with host defences. In Gram-positive bacteria the matrix of peptidoglycan and other wall polymers surrounding the cell is not an efficient barrier to the passage of small macromolecules, due both to its inherent structural permeability and to its turnover during normal cell growth. Indeed, peptidoglycan may be sufficiently permeable as to allow the passage of globular proteins of up to "50 kDa in size (Demchick & Koch, 1996 ;Dijkstra & Keck, 1996). Consequently, in the absence of a retentive outer membrane, Grampositive bacteria have evolved distinct mechanisms for retaining proteins within their cell envelopes, including covalent linkage to the peptidoglycan and non-covalent binding to teichoic acids and other cell envelope polymers (Navarre & Schneewind, 1999 ;Cossart & Jonquieres, 2000 ;Janulczyk & Rasmussen, 2001). Also significant among these mechanisms is membraneanchoring of bacterial lipoproteins (Lpps) by covalent N-terminal lipidation (Braun & Wu, 1994 ; Sutcliffe & Russell, 1995). Lpps in Gram-positive bacteria perform important roles as substrate-binding proteins (SBPs) in ABC transporter systems ; in antibiotic resistance ; in cell signalling ; in protein export and folding ; in sporulation and germination ; in conjugation and various other functions (Sutcliffe & Russell, 1995 valent to those carried out by periplasmic proteins of Gram-negative bacteria.The archetypal bacterial Lpp is the murein lipoprotein of Escherichia coli characterized by Braun and coworkers (reviewed in Braun & Wu, 1994). Structural studies revealed that a diacylglycerol moiety is thioether linked to an N-terminal cysteine of this Lpp and that this lipid group serves to orientate the protein by anchoring it to the inner leaflet of the outer membrane. Chemically identical lipid modifications have since been proposed, primarily on the basis of protein sequence analysis (see below), for a great many proteins in both Gram-positive and Gram-negative bacteria, although relatively few have received extensive biochemical characterization.Biosynthesis of bacterial lipoprotein of the ' Braun ' type proceeds via a well conserved pathway that is apparently unique to prokaryotes (Fig. 1). Following signal-peptidedirected export of the prolipoprotein (proLpp), the enzyme prolipoprotein diacylglycerol transferase (Lgt) uses phospholipid substrates and catalyses the addition of a diacylglycerol lipid unit onto the thiol of a crucial conserved cysteine which is located within a ' lipobox ' motif at the cleavage region of the proLpp signal peptide (Sankaran et al., 1995 ; Qi et al., 1995). Subsequently, the signal peptide is removed by a specific lipoprotein signal peptidase II (Lsp) enzyme which ...