Egasyn is localized within the lumen of the endoplasmic reticulum (ER) where it complexes with and thus causes sequestration of a considerable portion of beta-glucuronidase. Egasyn has an HTEL sequence at its carboxyl terminus rather than the KDEL sequence that serves as a retention signal for many ER lumenal proteins. To determine whether the HTEL sequence acts as an ER retention signal and/or functions in complex formation, HTEL-deleted egasyn was expressed in mammalian cell lines. The majority of HTEL-deleted egasyn was secreted, while wild type egasyn was retained in the ER. Furthermore, the egasyn HTEL sequence, when added to the carboxyl termini of two secretory proteins, mouse esterase, Es-N, and rat alpha 1-acid glycoprotein (AGP), caused retention of both proteins within the ER, demonstrating that the HTEL sequence is both necessary and sufficient for retention of egasyn and, by extension, the egasyn-glucuronidase complex within the ER. Other carboxyl terminal tetrapeptides including HIEL and HVEL, naturally occurring in other ER lumenal proteins, were also sufficient for ER retention of AGP, while HTEHT and HTEHK were inefficient in ER retention. The HTEL sequence, in contrast, is not required for egasyn-glucuronidase complex formation. Further, the complex is apparently unstable outside the ER since it was not visible in the medium of cells transfected with egasyn lacking the HTEL sequence despite abundant secretion of this egasyn. These results show that it is possible to localize proteins within the lumen of the ER if they form complexes with ER lumenal proteins containing an intrinsic ER retention sequence.