Heterologous proteins expressed on the surface of cells may be useful for eliciting therapeutic responses and engineering new extracellular properties. We examined factors that control the membrane targeting of alpha -fetoprotein (AFP) and a single-chain antibody (scFv). Chimeric proteins were targeted to the plasma membrane by employing the transmembrane domain (TM) and cytosolic tail of murine CD80 (B7-1), the TM of the human platelet-derived growth factor receptor (PDGFR), the glycosylphosphatidylinositol anchor encoded by the C-terminal extension of decay-accelerating factor (DAF), and the TM of the H1 subunit of the human asialoglycoprotein receptor (ASGPR). AFP chimeric protei ns containing the B7, DAF, ASGPR, or PDGFR targeting domains displayed half-lives of 12.2, 3.8, 2.4, and 1.6 h, respectively. The newly synthesized B7 chimera was rapidly transported and remained on the cell surface. Glycosylphosphatidylinositol-anchored chimeras reached the surface more slowly and significant amounts were released into the culture medium. PDGFR TM chimeras were rapidly degraded, whereas ASGPR chimeras were retained in the endoplasmic reticulum (ER). The surface expression of both AFP and scFv chimeric proteins followed the order (highest to lowest) of B7 > DAF >> PDGFR. Introduction of a dimerization domain (hinge-CH2-CH3 region of human IgG1) between scFv and TM dramatically reduced cleavage of the chimeric protein, increased surface expression, and produced biologically active scFv. Our results indicate that transgenes designed for the expression of active scFv on cells should incorporate a TM that does not undergo endocytosis, include an intact cytoplasmic domain, and possess a spacer to reduce cleavage and retain biological activity.