The targeting of various Rab proteins to different subcellular compartments appears to be determined by variable amino acid sequences located upstream from geranylgeranylated cysteine residues in the C-terminal tail. All nascent Rab proteins are prenylated by geranylgeranyltransferase II, which recognizes the Rab substrate only when it is bound to Rab escort protein (REP). After prenylation, REP remains associated with the modified Rab until it is delivered to the appropriate subcellular membrane. It remains unclear whether docking of the Rab with the correct membrane is solely a function of features contained within the prenylated Rab itself (with REP serving as a "passive" carrier) or whether REP actively participates in the targeting process. To address this issue, we took advantage of a mutation in the alpha2 helix of Rab1B (i.e. Y78D) that abolishes REP and GDI interaction without disrupting nucleotide binding or hydrolysis. These studies demonstrate that replacing the C-terminal GGCC residues of Rab1B(Y78D) with a CLLL motif permits this protein to be prenylated by geranylgeranyltransferase I but not II both in cell-free enzyme assays and in transfected cells. Subcellular fractionation and immunofluorescence studies reveal that the prenylated Rab1B(Y78D)CLLL, which remains deficient in REP and GDI association is, nonetheless, delivered to the Golgi and endoplasmic reticulum (ER) membranes. When the dominant-negative S22N mutation was inserted into Rab1B-CLLL, the resulting monoprenylated construct suppressed ER --> Golgi protein transport. However, when the Y78D mutation was added to the latter construct, its inhibitory effect on protein trafficking was lost despite the fact that it was localized to the ER/Golgi membrane. Therefore, protein interactions mediated by the alpha2 helical domain of Rab1B(S22N) appear to be essential for its functional interaction with components of the ER --> Golgi transport machinery.