To investigate the role of protein folding and chaperone-nascent chain interactions in translocation across the endoplasmic reticulum membrane, the translocation of wild type and mutant forms of preprolactin were studied in vivo and in vitro. The preprolactin mutant studied contains an 18-amino acid substitution at the amino terminus of the mature protein, eliminating a disulfide-bonded loop domain. In COS-7 cells, mutant prolactin accumulated in the endoplasmic reticulum as stable protein-protein and disulfide-bonded aggregates, whereas wild type prolactin was efficiently secreted. In vitro, wild type and mutant preprolactin translocated with equal efficiency although both translation products were recovered as heterogeneous aggregates. Studies with translocation intermediates indicated that aggregation occurred co-translationally. To evaluate the contribution of lumenal chaperones to translocation and folding, in vitro studies were performed with native and reconstituted, chaperone-deficient membranes. The absence of lumenal chaperones was associated with a decrease in translocation efficiency and pronounced aggregation of the translation products. These studies suggest that chaperone-nascent chain interactions significantly enhance translocation and indicate that in the absence of such interactions, aggregation can serve as the predominant in vitro protein folding end point. The ramifications of these observations on investigations into the mechanism of translocation are discussed.