The sequence Ser-Glu-Lys-Asp-Glu-Leu (SEKDEL) has been shown to be a signal which leads to retention of at least two proteins in the endoplasmic reticulum of animal cells (Munro and Pelham, 1987). In this study we tested the function of this signal by appending it to two secretory proteins, rat growth hormone and the alpha subunit of human chorionic gonadotrophin (hCG-alpha). We used oligonucleotide-directed mutagenesis and expression to generate proteins with SEKDEL added to the exact COOH termini and then carried out a detailed analysis of their transport in monkey COS cells. We found that transport was not blocked for either protein, but rather that the half-time for secretion was increased about sixfold for both proteins. Analysis of oligosaccharide processing on hCG-alpha-SEKDEL and indirect immunofluorescence microscopy on cells expressing both proteins was consistent with a retardation of transport between the endoplasmic reticulum and the Golgi apparatus. A change in the last amino acid of the SEKDEL sequence from Leu to Val abolished the retardation almost completely, suggesting a highly specific interaction of the sequence with a receptor. A change in the first amino acid had little or no effect on retardation. We conclude that the SEKDEL signal can have strong effects on reducing the rate of protein exit from the endoplasmic reticulum without generating absolute retention. Presumably other features of protein structure must be important to generate absolute retention.