In this report we show that antiserum prepared against the Mr60,000 transformation-specific antigen of Rous sarcoma virus immunoprecipitates both the Mr60,000 and Mr 25,000 transformation-specific proteins that are synthesized by cell-free translation of virion RNA; however, in the cell-free system the Mr 60,000 protein appears to be synthesized as a precursor that is approximately Mr 2000 larger than the [35S]-methionine-labeled protein immunoprecipitated from Rous sarcoma virus-infected cells. Peptide mapping of the cell-free translation product and of this cellular protein has confirmed that they are structurally related to one another. The addition of membrane vesicles to the reticulocyte lysate system during translation specifically cleaves a Mr 2000 segment from the Mr 60,000 protein so that it comigrates with the cellular species. Secretory proteins and probably at least some integral membrane proteins are synthesized with short hydrophobic signal sequences at their NH2 terminus. Two facts suggest that the segment lost from the Mr 60,000 transformation-specific protein is a signal sequence: (i) the membrane vesicles process the Mr 60,000 protein only during translation, and (ii) the processed protein is sequestered by the vesicles.