A truncated form of bovine microsomal 17 alpha-hydroxylase cytochrome P450 (P450c17) lacking its amino-terminal hydrophobic signal anchor sequence (delta 2-17) was expressed in Escherichia coli to give more than 600 nmol P450 per liter using XL1-blue as the host. The expression level of the truncated P450c17 showed variation among different host strains. When intact E. coli cells were used for analysis, the truncated P450c17 showed the typical cytochrome P450 CO-difference spectrum and type I substrate binding spectra for pregnenolone, 17 alpha-hydroxypregnenolone, progesterone, and 17 alpha-hydroxyprogesterone. The apparent Ks values for these steroids are comparable to those obtained under the same conditions with wild type P450c17. The truncated P450c17 is primarily associated with the membrane fraction from E. coli and remained with this fraction after treatment with 0.1 M Na2CO3. The 17 alpha-hydroxylase activity of the truncated form was observed using intact E. coli. Using isolated membrane fractions, the truncated P450c17 also showed 17,20-lyase activity upon reconstitution with rat liver microsomal NADPH-cytochrome P450 reductase. These results indicate that P450c17 can be associated with E. coli membranes not only via the amino-terminal hydrophobic region as expected for the wild type, nontruncated form, but also through other sequences within the polypeptide chain and that integration of the amino-terminal region into the membrane is not essential for the folding pathway leading to functional P450c17 in E. coli. This is in contrast to mammalian cells where the same truncated P450c17 is found to be inactive and the folding pathway leading to functional P450c17 appears to require a signal anchor sequence.