We demonstrated that a region in the stem of N-acetylglucosaminyltransferase V (GnT-V), a Golgi resident protein, is not required for enzyme activity but serves as functional domain, responsible for intracellular localization. Deletion of the domain led to complete retention of the kinetic properties but resulted in the cell surface localization of the enzyme as well as its efficient secretion into the medium. The lack of this domain concomitantly abolished the disulfide-mediated oligomerization of GnT-V, which appears to confer the Golgi retention. When the domain was inserted into the stem region of a cell surface-localized type II membrane protein, the resulting chimeric protein was substantially oligomerized and predominantly localized in the intracellular organelle. Furthermore, it was found that the presence of this domain is exclusively responsible for homo-oligomer formation. This homophilic interaction appears to involve a hydrophobic cluster of residues in the alpha-helix of the domain, as indicated by secondary structure predictions. These findings suggest that the domain specifically participates in the Golgi retention of GnT-V, probably via inducing homo-oligomer formation, and would also provide a possible mechanism for the oligomerization, which is critical for localization in the Golgi.