Retention of soluble proteins in the endoplasmic reticulum is dependent on their interaction with the KDEL (Lys-Asp-Glu-Leu) receptor in the Golgi apparatus and their subsequent retrieval back to the endoplasmic reticulum. We have studied the three-dimensional organization of the human KDEL receptor using site-directed mutagenesis and sulfhydryl-specific labeling, We have identified four amino acid residues, Arg-5, Asp-50, Tyr-162, and Asn-165, which we suggest participate in the formation of the ligand binding pocket. Arg-5 and Asp-50 are shown to be located on the lumenal side of the membrane and are inaccessible from the cytoplasm, In addition, our results strongly support a topology of the KDEL receptor similar to the family of G-protein-coupled receptors with seven transmembrane domains, Furthermore, Asp-50 plays a crucial role in the binding of His/Lys-Asp-Glu-Leu ligands, but is not required for Asp-Asp-Glu-Leu binding, suggesting that this residue forms an ion pair with the positively charged amino acid residue positioned 4 residues from the carboxyl terminus of the ligand.