Two forms of congenital muscular dystrophy (CMD), Fukuyama CMD and CMD type 1C (MDC1C) are caused by mutations in the genes encoding two putative glycosyltransferases, fukutin and fukutin-related protein (FKRP). Additionally, mutations in the FKRP gene also cause limb-girdle muscular dystrophy type 2I (LGMD2I), a considerably milder allelic variant than MDC1C. All of these diseases are associated with secondary changes in muscle alpha-dystroglycan expression. To elucidate the function of FKRP and fukutin and examine the effects of MDC1C patient mutations, we have determined the mechanism for the subcellular location of each protein. FKRP and fukutin are targeted to the medial-Golgi apparatus through their N-termini and transmembrane domains. Overexpression of FKRP in CHO cells alters the post-translational processing of alpha- and beta-dystroglycan inhibiting maturation of the two isoforms. Mutations in the DxD motif in the putative active site of the protein or in the Golgi-targeting sequence, which cause FKRP to be inefficiently trafficked to the Golgi apparatus, did not alter dystroglycan processing in vitro. The P448L mutation in FKRP that causes congenital muscular dystrophy changes a conserved amino acid resulting in the mislocalization of the mutant protein in the cell that is unable to alter dystroglycan processing. Our data show that FKRP and fukutin are Golgi-resident proteins and that FKRP is required for the post-translational modification of dystroglycan. Aberrant processing of dystroglycan caused by a mislocalized FKRP mutant could be a novel mechanism that causes congenital muscular dystrophy.