We have examined the process of membrane protein targeting in the polarized cells of the developing Drosophila melanogaster embryo. Human placental alkaline phosphatase (PLAP) is a glycosylphosphatidyl inositol-linked protein that accumulates at the apical membranes of mammalian epithelial cells. A chimeric construct composed of the transmembrane and cytosolic portions of the vesicular stomatitis virus G protein coupled to the ectodomain of PLAP, termed PLAPG, has been found to behave as a basolateral protein (D. A. Brown, B. Crise, and J. K. Rose. Science Wash. DC 232: 34-47, 1989). The subcellular distributions of these proteins were examined in the epithelial and neuronal tissues of transgenic Drosophila embryos. In the surface ectoderm, both PLAP and PLAPG were restricted to the basolateral membranes throughout development. Internal epithelia derived from the surface ectoderm accumulated PLAP at their apical surfaces, whereas PLAPG retained its basolateral distribution. The redistribution of PLAP from the basolateral to the apical plasma membrane was found to be coincident with the invagination of the surface epithelium to form internal structures, suggesting that the sorting pathways that function in the epithelium of the Drosophila embryo are developmentally regulated.