The significance of a C-terminal tetrapeptide, Lys-Asp-Glu-Leu (KDEL), as a retention signal for the endoplasmatic reticulum was studied using cystatin C, a general thiol protease inhibitor, as the reporter protein. Clones of CHO cells were analyzed after stable transfection with eukaryotic expression vectors encoding either cystatin C, KDEL extended cystatin C, or cystatin C extended with a control sequence. It is concluded that cystatin C with the KDEL tetrapeptide as a C-terminal extension is retained intracellularly without apparent accumulation of the molecule.