Targeting of many polytopic proteins to the inner membrane of prokaryotes occurs via an essential signal recognition particle-like pathway. Unlike the general secretory pathway, the proteins involved in this pathway and their activities appear in many respects to mirror closely those of their eukaryotic homologues. However, the Escherichia coli signal recognition particle receptor, FtsY, differs significantly at the amino terminus from the eukaryote homologue alpha-subunit of the signal recognition particle receptor. In addition, there is no prokaryote homologue of the transmembrane beta-subunit of the receptor. Therefore, FtsY must assemble on the membrane in a unique manner. Using assays designed to accurately discriminate membrane-bound proteins from aggregated material, we found that in contrast to a previous report, only amino acids 1-284 of FtsY are necessary and sufficient for membrane assembly. These amino acids together constitute a bona fide membrane binding domain that includes both the regions originally designated A and N based on sequence comparisons. Furthermore, we found that a membrane-bound factor mediates specific cleavage of some membrane-bound FtsY molecules between the N and G regions previously believed to be functionally linked to generate a novel membrane-bound isoform composed of only the AN domain.