The ERD1 gene product is required for the correct localization of soluble proteins that normally reside in the endoplasmic reticulum (ER). Cell lacking ERD1 secrete resident ER proteins and, in addition, exhibit defects in the processing of glycoproteins. Here, the molecular characterization of the Kluyveromyces lactis ERD1 homologue is described. A comparison of the predicted sequences of the Saccharomyces cerevisiae and K. lactis Erd1 proteins indicates that they are about 30% identical and 50% similar in sequence. Despite low sequence identity, these proteins are predicted to be conserved structurally. Furthermore, the K. lactis protein can functionally complement an S. cerevisiae mutant containing a deletion of the entire ERD1 gene, indicating these two proteins are functional homologues.