The subcellular distribution of COOH-terminal carboxyl methyltransferase and methylated substrates was studied in purified brush-border and basolateral plasma membranes, as well as in crude intracellular membranes and the cytosolic fraction isolated from rat kidney cortex. The three membrane fractions showed intrinsic carboxyl methylation of 21- to 23-kDa proteins, whereas 18- and 41-kDa methylated proteins were observed in the cytosol. In contrast, methylation activities toward N-acetyl-S-trans,trans-farnesyl-L-cysteine (AFC), a synthetic farnesylated substrate, were found to be strictly associated with membranes, with no detectable level of activity in the cytosol. Methylation of all membrane-associated substrates was inhibited by AFC but remained unaffected by TS-isoD-YSKY, a synthetic isopeptide recognized by L-isoaspartyl methyltransferase, suggesting that the membrane-associated substrates were methylated on a COOH-terminal isoprenylated cysteine residue. The membrane-associated methylated proteins were tightly bound to the membranes as reflected by their extraction with 3-[(3-cholamidopropyl)-dimethylammonio]-1-propanesulfonate but not with 1 M NaCl or 2 M urea. The nonhydrolyzable analogues of GTP and GDP, guanosine 5'-O-(3-thiotriphosphate) (GTP-gammaS) and guanosine 5'-O-(2-thiodiphosphate) (GDPbetaS), markedly increased the methylation of the 21- to 23-kDa substrates, whereas ATPgammaS and ADPbetaS were without effect. This effect of guanine nucleotides was restricted to endogenous 21- to 23-kDa substrates with no stimulation of methylation of the exogenous substrate, AFC. Our results show a wide distribution of both COOH-terminal protein carboxyl methyltransferase activities and associated methylated substrates in the kidney cortex. Moreover, the variation in the degree of methylation of the membrane-associated 21- to 23-kDa proteins by guanine nucleotides may suggest the existence of cellular mechanisms involved in the regulation of the methylation activities.