Tight junctions form a morphological and physical border between the apical and the basolateral cell surface domains of epithelial cells; hence assembly of tight junctions could occur from both of the two plasma membrane domains. We show here that the C-terminal cytoplasmic domain of occludin, the only known transmembrane protein of tight junctions, was sufficient to mediate basolateral expression of a chimeric protein. Since this chimera was transported directly to the basolateral membrane during biosynthesis, the C-terminal domain of occludin contains a basolateral targeting signal. Additionally, the C-terminal domain of occludin was also able to mediate endocytosis. Thus, the C-terminal cytoplasmic domain appears to govern intracellular transport of occludin. To test whether the basolateral membrane is an obligatory intermediate in transport of occludin to tight junctions, we analyzed the expression of occludin molecules rendered unable to efficiently integrate into tight junctions by the introduction of N-linked glycosylation sites into the two extracellular loops. Indeed, glycosylated occludin accumulated in the basolateral membrane, supporting a model in which the biogenesis of tight junctions occurs from this cell-surface domain.