Despite advances in understanding the cell biology of glycoinositol phospholipid (GPI)-anchored proteins in cultured cells, the in vivo functions of GPI anchors have remained elusive. We have focused on Drosophila acetylcholinesterase (AChE) as a model GPI-anchored protein that can be manipulated in vivo with sophisticated genetic techniques. In Drosophila, AChE is found only as a GPI-anchored G2 form encoded by the Ace locus on the third chromosome. To pursue our goal of replacing wild-type GPI-anchored AChE with forms that have alternative anchor structures in transgenic files, we report the construction of two secreted forms of Drosophila AChE (SEC1 and SEC2) and a chimeric form (TM-AChE) anchored by the transmembrane and cytoplasmic domains of herpes simplex virus type 1 glycoprotein C. To confirm that the biochemical properties of these AChEs were unchanged from GPI-AChE except as predicted, we made stably transfected Drosophila Schneider Line 2(S2) cells expressing each of the four forms. TM-AChE, SEC1, and SEC2 had the same catalytic activity and quaternary structure as wild type. TM-AChE was expressed as an amphiphilic membrane-bound protein resistant to an enzyme that cleaves GPI-AChE (phosphatidylinositol-specific phospholipase C), and the same percentage of TM-AChE and GPI-AChE was on the cell surface according to immunofluorescence and pharmacological data. SEC1 and SEC2 were constructed by truncating the C-terminal signal peptide initially present in GPI-AChE: in SEC1 the last 25 residues of this 34-residue peptide were deleted while in SEC2 the last 29 were deleted. Both SEC1 and SEC2 were efficiently secreted and are very stable in culture medium; with one cloned SEC1-expressing line, AChE accumulated to as high as 100 mg/liter. Surprisingly, 5-10% of SEC1 was attached to a GPI anchor, but SEC2 showed no GPI anchoring. Since no differences in catalytic activity were observed among the four AChEs, and since the same percentage of GPI-AChE and TM-AChE were on the cell surface, we contend that in vivo experiments in which GPI-AChE is replaced can be interpreted solely on the basis of the altered anchoring domain.