To study rhodopsin biosynthesis and transport in vivo, we engineered a fusion protein (rho-GFP) of bovine rhodopsin (rho) and green fluorescent protein (GFP). rho-GFP expressed in COS-1 cells bound 11-cis retinal, generating a pigment with spectral properties of rhodopsin (A(max) at 500 nm) and GFP (A(max) at 488 nm). rho-GFP activated transducin at 50% of the wild-type activity, whereas phosphorylation of rho-GFP by rhodopsin kinase was 10% of wild-type levels. We expressed rho-GFP in the rod photoreceptors of Xenopus laevis using the X. laevis principal opsin promoter. Like rhodopsin, rho-GFP localized to rod outer segments, indicating that rho-GFP was recognized by membrane transport mechanisms. In contrast, a rho-GFP variant lacking the C-terminal outer segment localization signal distributed to both outer and inner segment membranes. Confocal microscopy of transgenic retinas revealed that transgene expression levels varied between cells, an effect that is probably analogous to position-effect variegation. Furthermore, rho-GFP concentrations varied along the length of individual rods, indicating that expression levels varied within single cells on a daily or hourly basis. These results have implications for transgenic models of retinal degeneration and mechanisms of position-effect variegation and demonstrate the utility of rho-GFP as a probe for rhodopsin transport and temporal regulation of promoter function.