Human discs large (hDlg) protein binds to protein 4.1R via a motif encoded by an alternatively spliced exon located between the SH3 and the C-terminal guanylate kinase-like domains. To evaluate the functional significance of protein 4.1R binding for subcellular localization of hDlg in vivo, we expressed full-length recombinant constructs of two naturally occurring isoforms of hDlg termed hDlg-I2 and hDlg-I3. The hDlg-I3 but not the hDlg-I2 isoform binds to the FERM (Four.1-Ezrin-Radixin-Moesin) domain of protein 4.1R in vitro. Upon transient transfection into subconfluent Madine-Darby canine kidney (MDCK) epithelial cells, the hDlg-I3 fused with the green fluorescent protein accumulated predominantly at the plasma membrane of cell-cell contact sites, whereas the hDlg-I2 fusion protein distributed in the cytoplasm. In contrast, in stably transfected confluent MDCK cells, both hDlg-I2 and -I3 isoforms localized efficiently to the lateral membrane, consistent with the previous notion that the N-terminal domain of hDlg mediates its membrane targeting in polarized epithelial cells. We introduced a double mutation (I38A/I40A) into the N-terminal domain of hDlg, which disrupted its interaction with DLG2, a key event in the membrane targeting of hDlg. Interestingly, the hDlg-I2 isoform harboring the I38A/I40A mutation mislocalized from the membrane into cytoplasm. Importantly, the hDlg-I3 isoform with the same mutation localized efficiently to the membrane of confluent MDCK cells. Together, our results demonstrate that in addition to the N-terminal targeting domain, the alternatively spliced I3 insertion plays a critical role in recruiting hDlg to the lateral membrane in epithelial cells via its interaction with protein 4.1R.