11beta-Hydroxysteroid dehydrogenase enzymes (11beta- HSD) regulate the ratio of active endogenous glucocorticoids to their inactive keto-metabolites, thereby controlling the access of glucocorticoids to their cognate receptors. In this study, the topology and intracellular localization of 11beta-HSD1 and 11beta-HSD2 have been analyzed by immunohistochemistry and protease protection assays of in vitro transcription/translation products. 11beta-HSD constructs, tagged with the FLAG epitope, were transiently expressed in HEK-293 cells. The enzymatic characteristics of tagged and native enzymes were indistinguishable. Fluorescence microscopy demonstrated the localization of both 11beta-HSD1 and 11beta-HSD2 exclusively to the endoplasmic reticulum (ER) membrane. To examine the orientation of tagged 11beta-HSD enzymes within the ER membrane, we stained selectively permeabilized HEK-293 cells with anti-FLAG antibody. Immunohistochemistry revealed that the N terminus of 11beta-HSD1 is cytoplasmic, and the catalytic domain containing the C terminus is protruding into the ER lumen. In contrast, the N terminus of 11beta-HSD2 is lumenal, and the catalytic domain is facing the cytoplasm. Chimeric proteins where the N-terminal anchor sequences of 11beta-HSD1 and 11beta-HSD2 were exchanged adopted inverted orientation in the ER membrane. However, both chimeric proteins were not catalytically active. Furthermore, mutation of a tyrosine motif to alanine in the transmembrane segment of 11beta-HSD1 significantly reduced V(max). The subcellular localization of 11beta-HSD1 was not affected by mutations of the tyrosine motif or of a di-lysine motif in the N terminus. However, residue Lys(5), but not Lys(6), turned out to be critical for the topology of 11beta-HSD1. Mutation of Lys(5) to Ser inverted the orientation of 11beta-HSD1 in the ER membrane without loss of catalytic activity. Our results emphasize the importance of the N-terminal transmembrane segments of 11beta-HSD enzymes for their proper function and demonstrate that they are sufficient to determine their orientation in the ER membrane.