The human MDR1 gene encodes the multidrug transporter (P-glycoprotein), a multidrug efflux pump. The highly homologous MDR2 gene product does not appear to be a functional multidrug pump. We have constructed a chimeric protein in which the first intracytoplasmic loop and the third and fourth transmembrane domains of the MDR1 protein were replaced by the analogous region of MDR2. Substitution of the MDR2 sequences encompassing amino acid residues 140 to 229 resulted in 17 amino acid changes, 10 in the intracytoplasmic loop (amino acids 141-188) and 7 in the transmembrane regions. This chimeric protein was expressed on the surface of NIH 3T3 cells where it bound [3H]azidopine but did not confer drug resistance. When only 4 residues, 165, 166, 168, and 169, were changed back to MDR1 amino acids, a functional drug transporter was recovered. When residues 165, 166, 168, and 169 from MDR2 were substituted into a functional MDR1 cDNA, the resulting construction was not able to confer drug resistance. These results indicate that the major functional differences between MDR1 and MDR2 in this region of P-glycoprotein reside in a small segment of the first intracytoplasmic loop. We also independently analyzed the effect of replacing Asn183 of MDR1 with Ser which occurs in MDR2. Substitution of Ser at position 183 in combination with Val at position 185 in P-glycoprotein resulted in a relative increase in resistance to actinomycin D, vinblastine, and doxorubicin in transfected NIH 3T3 cells. These results emphasize the importance of the first intracytoplasmic loop in P-glycoprotein in determining function and relative drug specificity of the transporter.