To test whether glycosyl phosphatidylinositol-linked T-cadherin is a component of cell junctions like classical cadherins, we have examined its distribution and targeting in polarized epithelial cells. In vivo, T-cadherin was detected on the apical cell surface of the chick intestinal epithelium. In cultures of transfected Madin-Darby canine kidney cells, T-cadherin was also expressed apically, whereas classical N-cadherin resided basolaterally, Both cadherins were directly targeted to their respective membrane domains, Mutant proteins were expressed in Madin-Darby canine kidney cells to identify the regions responsible for differential cadherin localization. N Delta cyt, an N-cadherin cytoplasmic domain deletion mutant, was stably distributed basolaterally, This mutant was transported to both the apical and basolateral membrane compartments, followed by preferential removal from the apical surface, T-N Delta cyt, a T-cadherin mutant with the N-cadherin cytoplasmic domain deletion, was localized basolaterally, whereas N-T-GPI, a GPI-anchored N-cadherin mutant, resided at the apical domain, The T-cadherin carboxyl-terminal 76 amino acids contain the apical targeting signal and include the signal for GPI anchor attachment. Basolateral localization of N-cadherin is achieved through targeting signals in the cytoplasmic domain, Thus, GPI-linked T-cadherin is not a component of cell junctions, consistent with a function as a recognition rather than a cell adhesion molecule.