An inactive precursor form of proteinase A (PrA) transits through the early secretory pathway before final vacuolar delivery. We used gene fusions between the gene coding for PrA (PEP4) and the gene coding for the secretory enzyme invertase (SUC2) to identify vacuolar protein-sorting information in the PrA precursor. We found that the 76-amino-acid preprosegment of PrA contains at least two sorting signals: an amino-terminal signal peptide that is cleaved from the protein at the level of the endoplasmic reticulum followed by the prosegment which functions as a vacuolar protein-sorting signal. PrA-invertase hybrid proteins that carried this sequence information were accurately sorted to the yeast vacuole as determined by cell fractionation and immunolocalization studies. Hybrid proteins lacking all or a portion of the PrA prosegment were secreted from the cell. Our gene fusion data together with an analysis of the wild-type PrA protein indicated that N-linked carbohydrate modifications are not required for vacuolar sorting of this protein. Furthermore, results obtained with a set of deletion mutations constructed in the PrA prosegment indicated that this sequence also contributes to proper folding of this polypeptide into a stable transit-competent molecule.