Expression of the glucose-regulated protein, GRP78, is markedly increased when cells are placed in a variety of stressful environments (i.e., low glucose medium, calcium ionophore treatment). In this report, the genomic organization of the rat GRP78 gene is described. This gene comprises eight exons and encodes a protein which is highly hydrophilic with the notable exception of several short hydrophobic domains. The first hydrophobic region, 18 amino acids at the N-terminus of the protein, putatively acts as a signal sequence to target GRP78 into the endoplasmic reticulum (ER). By ligating portions of the GRP78 gene and its promoter to the bacterial gene encoding chloramphenicol acetyltransferase (CAT), we created heterologous CAT genes inducible by calcium ionophore A23187. Through immunofluorescence analysis, the intracellular localizations of endogenous GRP78 and fusion CAT proteins under normal growth and A23187-induced conditions are identified. By fusing the GRP78 signal sequence to CAT, we influence intracellular targeting of the CAT protein into the ER.