Many eukaryotic cell surface proteins are bound to the membrane via a glycosylphosphatidylinositol (GPI) anchor. Assembly of the GPI anchor precursor is a sequential addition of components to phosphatidylinositol (PI) in the endoplasmic reticulum (ER). The first step is the transfer of N-acetylglucosamine (GlcNAc) to PI from UDP-GlcNAc to generate GlcNAc-PI. This simple step, however, is regulated by at least three genes because in both mammals and yeasts, there are three mutants of different complementation classes. To clarify this complexity, we analyzed the products of two cloned human genes, PIG-A and PIG-H. Here we demonstrate 1) that PIG-A is an ER transmembrane protein with a large cytoplasmic domain that has homology to a bacterial GlcNAc transferase and a small lumenal domain; 2) that PIG-H is a cytoplasmically oriented, ER-associated protein; and 3) that they form a protein complex. We also show that part of the small lumenal domain of PIG-A plays an essential functional role in targeting itself to the rough ER. Taken together with the cytoplasmic orientation of GlcNAc-PI, these results indicated that PIG-A and PIG-H are subunits of the GPI GlcNAc transferase that transfers GlcNAc to PI on the cytoplasmic side of the ER.