beta2-Microglobulin has been synthesized in vitro by using a rabbit reticulocyte lysate system and mRNA from the mouse tumor cell line EL4. The molecule is synthesized as a precursor with an NH2-terminal extension of 19 amino acids: Ser-X-Ser-Val-X-Leu-Val-Phe-Leu-Val-Leu-Val-Ser-Leu-X-Gly-Leu-Tyr-X. The processing and segregation of this peripheral membrane protein are directly comparable to those of secretory proteins and integral membrane proteins: addition of dog pancreas microsomal membranes during translation caused conversion to the processed chain, but addition of membranes after synthesis did not; only the processed chain sedimented with the membrane vesicles and was protected from proteolysis by the vesicles; and processing of nascent beta 2-microglobulin was blocked by competitive inhibitors that prevent processing and segregation of secretory and integral membrane proteins. These results suggest that the signal sequences of secretory proteins, integral membrane proteins, and peripheral membrane proteins have a common function and a common receptor on the cytoplasmic face of dog pancreas microsomal membranes. This system also provides a means for studying in vitro the expression and function of the major histocompatibility antigens that are associated with beta 2-microglobulin on cell surfaces.