Bacterial lipoproteins comprise a subset of membrane proteins that are covalently modified with lipids at the amino-terminal Cys. Lipoproteins are involved in a wide variety of functions in bacterial envelopes. Escherichia coli has more than 90 species of lipoproteins, most of which are located on the periplasmic surface of the outer membrane, while others are located on that of the inner membrane. In order to elucidate the mechanisms by which outer-membrane-specific lipoproteins are sorted to the outer membrane, biochemical, molecular biological and crystallographic approaches have been taken. Localization of lipoproteins on the outer membrane was found to require a lipoprotein-specific sorting machinery, the Lol system, which is composed of five proteins (LolABCDE). The crystal structures of LolA and LolB, the periplasmic chaperone and outer-membrane receptor for lipoproteins, respectively, were determined. On the basis of the data, we discuss here the mechanism underlying lipoprotein transfer from the inner to the outer membrane through Lol proteins. We also discuss why inner membrane-specific lipoproteins remain on the inner membrane.