Cytochrome P4501A1 is a hepatic, microsomal membrane–bound enzyme that is highly induced by various xenobiotic agents. Two NH 2 -terminal truncated forms of this P450, termed P450MT2a and MT2b, are also found localized in mitochondria from β-naphthoflavone–induced livers. In this paper, we demonstrate that P4501A1 has a chimeric NH 2 -terminal signal that facilitates the targeting of the protein to both the ER and mitochondria. The NH 2 -terminal 30–amino acid stretch of P4501A1 is thought to provide signals for ER membrane insertion and also stop transfer. The present study provides evidence that a sequence motif immediately COOH-terminal (residues 33–44) to the transmembrane domain functions as a mitochondrial targeting signal under both in vivo and in vitro conditions, and that the positively charged residues at positions 34 and 39 are critical for mitochondrial targeting. Results suggest that 25% of P4501A1 nascent chains, which escape ER membrane insertion, are processed by a liver cytosolic endoprotease. We postulate that the NH 2 -terminal proteolytic cleavage activates a cryptic mitochondrial targeting signal. Immunofluorescence microscopy showed that a portion of transiently expressed P4501A1 is colocalized with the mitochondrial-specific marker protein cytochrome oxidase subunit I. The mitochondrial-associated MT2a and MT2b are localized within the inner membrane compartment, as tested by resistance to limited proteolysis in both intact mitochondria and mitoplasts. Our results therefore describe a novel mechanism whereby proteins with chimeric signal sequence are targeted to the ER as well as to the mitochondria.