The mammalian KDEL receptor is an extremely hydrophobic membrane protein. One of the longest stretches of hydrophilic sequence resides at the C-terminus. Various antibodies against a synthetic peptide corresponding to this region confirmed that the C-terminus is exposed to the cytoplasm. It was observed that antibody binding to the C-terminus of the KDEL receptor was diminished during immunofluorescence microscopy procedures which involved fixation prior to permeabilization as compared to when cells were permeabilized before fixation. Binding of both polyclonal and monoclonal antibodies, as assessed by indirect immunofluorescence microscopy in digitonin permeabilized cells, was inhibited by preincubation with rat liver cytosol. This inhibition was not observed with antibody against another membrane protein (p28) with a cytoplasmically exposed epitope also residing in the Golgi/intermediate compartment. Rabbit reticulocyte lysate had a similar effect while Schizosaccharomyces pombe cytosol inhibited binding to a greater degree than Saccharomyces cerevisiae cytosol. This inhibition by cytosol was prevented by coincubation with the antibody and was dose-dependent on the cytosol. Inhibition did not occur on ice or at 15 degrees C, or when the cytosol was energy-depleted by apyrase treatment. Interestingly, pretreatment of permeabilized cells with N-ethylmaleimide or its addition into the incubation mixture abolished inhibition. N-ethylmaleimide-treated cytosol, however, remained inhibitory. The findings suggest the existence of cytosolic factor (s) which interacts specifically with the cytoplasmic C-terminus of the KDEL receptor, which are likely to be components of the KDEL protein retrieval machinery.