The COOH terminus of decay accelerating factor (DAF) contains a signal that directs attachment of a glycophospholipid (GPI) membrane anchor. To define this signal we deleted portions of the DAF COOH terminus and expressed the mutant cDNAs it CV1 origin-deficient SV-40 cells. Our results show that the COOH-terminal hydrophobic domain (17 residues) is absolutely required for GPI anchor attachment. However, when fused to the COOH terminus of a secreted protein this hydrophobic domain is insufficient to direct attachment of a GPI anchor. Additional specific information located within the adjacent 20 residues appears to be necessary. We speculate that by analogy with signal sequences for membrane translocation, GPI anchor attachment requires both a COOH-terminal hydrophobic domain (the GPI signal) as well as a suitable cleavage/attachment site located NH2 terminal to the signal.