We have characterized the structure, biogenesis, and localization of dipeptidyl aminopeptidase B (DPAP B), a membrane protein of the yeast vacuole. An antibody specific for DPAP B recognizes a 120-kD glycoprotein in yeast that behaves like an integral membrane protein in that it is not removed from membranes by high pH Na2CO3 treatment. Inspection of the deduced amino acid sequence of DPAP B reveals a hydrophobic domain near the NH2 terminus that could potentially span a lipid bilayer. The in vitro enzymatic activity and apparent molecular weight of DPAP B are unaffected by the allelic state of PEP4, a gene essential for the proteolytic activation of a number of soluble vacuolar hydrolases. DPAP B is synthesized as a glycosylated precursor that is converted to the mature 120-kD species by carbohydrate addition. The precursor form of DPAP B accumulates in sec mutants (Novick, P., C. Field, and R. Schekman. 1980. Cell. 21:205-215) that are blocked at the ER (sec18) or Golgi apparatus (sec7), but not at secretory vesicles (sec1). Immunolocalization of DPAP B in wild-type or sec1 mutant cells shows that the protein resides in the vacuolar membrane. However, it is present in non-vacuolar compartments in sec18 and sec7 cells, confirming that the delivery of DPAP B is blocked in these mutants. Interestingly, DPAP B appears to stain the nuclear envelope in a sec18 mutant, which is consistent with the accumulation of DPAP B in the ER membrane at the restrictive temperature. These results suggest that soluble and membrane-bound vacuolar proteins use the same stages of the secretory pathway for their transport.