Phosphatidylethanolamine N-methyltransferase catalyzes the synthesis of phosphatidylcholine from phosphatidylethanolamine and is most active in liver. A cDNA for this enzyme from a rat liver cDNA library has been cloned, sequenced, and expressed in COS-1 cells, McArdle-RH7777 rat hepatoma cells, and Sf9 insect cells. The expressed protein was capable of converting phosphatidylethanolamine into phosphatidylcholine in intact COS-1 cells, which normally have very low methyltransferase activity. The calculated molecular mass of the methyltransferase protein is 22.3 kDa, which is equivalent to that of the pure protein isolated from rat liver. Comparison of the sequence of the cloned rat liver methyltransferase with the yeast phosphatidylethanolamine methyltransferase PEM2 gene product revealed 44% identical amino acids and 68% similarity in the two predicted protein sequences. A polyclonal antibody was raised against a synthetic peptide corresponding to the carboxyl-terminal region of the enzyme and was affinity purified. The antibody recognized a single protein with a molecular mass of approximately 20 kDa when either rat liver proteins or proteins derived from the transfected COS-1 cells were electrophoresed on polyacrylamide gels containing sodium dodecyl sulfate. Surprisingly, the antibody exhibited no reactivity with endoplasmic reticulum proteins, even though the major phosphatidylethanolamine methyltransferase activity resides on this subcellular organelle. Instead, the antibody specifically recognized a protein in a unique subcellular membrane fraction purified from a crude mitochondrial preparation on a Percoll gradient. Immunocytochemical examination by electron microscopy showed positive labeling only in unique regions of the hepatocytes. The data suggest that this phosphatidylethanolamine methyltransferase is a specific marker for this unique membrane fraction.