In Escherichia coli, the topology of inner membrane proteins can be studied conveniently with the alkaline phosphatase/beta-galactosidase (PhoA/LacZ) gene fusion system. PhoA is enzymatically active only when fused to external domains, LacZ when fused to cytoplasmic domains. In eukaryotic cells, only time consuming methods exist to study the topology of membrane proteins. We have extended in the first systematic study the PhoA/LacZ gene fusion system originally developed for E.coli for use in eukaryotic COS.M6 cells. We have fused PhoA and LacZ to the putative external and cytoplasmic loops of rat aquaporin 2 (AQP2), for which a model with six transmembrane domains was proposed previously. The fusion proteins were expressed in E.coli and COS.M6 cells and immunoblot analyses and enzyme activity assays were performed to localize the protein domains in both cell types. The data obtained in E.coli correlated mostly with the predictions of the six transmembrane domain model. However, two fusions were found to exhibit both high PhoA and high LacZ activity, thereby complicating the construction of a complete AQP2 model. In COS.M6 cells, the PhoA fusions were inactive. In contrast, the LacZ fusions succeeded and showed an activity pattern in complete agreement with the predictions of the six transmembrane domain model. Therefore, LacZ fusions can localize cytoplasmic loops in COS.M6 cells by means of a simple enzymatic assay with high reliability and may be used in future studies to develop topological models of other eukaryotic membrane proteins in their authentic cell systems.