Carboxypeptidase E (CPE), a neuropeptide processing enzyme, is present in neuroendocrine tissues in soluble and membrane-associated forms. The membrane-associated forms do not contain a conventional transmembrane-spanning domain; instead, the C-terminal region of CPE has been proposed to form an amphiphilic helix which binds to the membrane. To test this, and to investigate the possible contribution of this C-terminal sequence to the intracellular sorting of CPE into the regulated pathway, the C-terminal region of CPE was attached to albumin and the recombinant proteins expressed in AtT-20 cells. Albumin itself showed little association with membranes under the conditions examined. A construct containing albumin with only 9 residues of CPE, corresponding to a highly charged region immediately preceding the potential amphiphilic helix region, showed generally similar membrane binding and secretion rates as albumin alone. When the C-terminal 51 amino acids of CPE were attached to the C terminus of albumin and the recombinant protein detected with an antisera raised against the C terminus of CPE, virtually all of the protein was membrane-associated. This finding suggests that the C-terminal region of CPE functions as a membrane anchor. The secretion of albumin with the C-terminal region of CPE was stimulated by a phorbol ester and by forskolin, although the magnitude of the stimulation was smaller than the effect of these compounds on the secretion of CPE. These results imply that the C-terminal region of CPE contains the membrane anchor and contributes to the sorting of this protein into the regulated pathway.