Many proteins of eukaryotic cells are anchored to membranes by covalent linkage to glycosyl-phosphatidylinositol (GPI). These proteins lack a transmembrane domain, have no cytoplasmic tail, and are, therefore, located exclusively on the extracellular side of the plasma membrane. GPI-anchored proteins form a diverse family of molecules that includes membrane-associated enzymes, adhesion molecules, activation antigens, differentiation markers, protozoan coat components, and other miscellaneous glycoproteins. In the kidney, several GPI-anchored proteins have been identified, including uromodulin (Tamm-Horsfall glycoprotein), carbonic anhydrase type IV, alkaline phosphatase, Thy-1, BP-3, aminopeptidase P, and dipeptidylpeptidase. GPI-anchored proteins can be released from membranes with specific phospholipases and can be recovered from the detergent-insoluble pellet after Triton X-114 treatment of membranes. All GPI-anchored proteins are initially synthesized with a transmembrane anchor, but after translocation across the membrane of the endoplasmic reticulum, the ecto-domain of the protein is cleaved and covalently linked to a preformed GPI anchor by a specific transamidase enzyme. Although it remains obscure why so many proteins are endowed with a GPI anchor, the presence of a GPI anchor does confer some functional characteristics to proteins: (1) it is a strong apical targeting signal in polarized epithelial cells; (2) GPI-anchored proteins do not cluster into clathrin-coated pits but instead are concentrated into specialized lipid domains in the membrane, including so-called smooth pinocytotic vesicles, or caveoli; (3) GPI-anchored proteins can act as activation antigens in the immune system; (4) when the GPI anchor is cleaved by PI-phospholipase C or PI-phospholipase D, second messengers for signal transduction may be generated; (5) the GPI anchor can modulate antigen presentation by major histocompatibility complex molecules. Finally, at least one human disease, paroxysmal nocturnal hemoglobinuria, is a result of defective GPI anchor addition to plasma membrane proteins.