Multidrug resistance protein (MRP) 1 is a member of the ABCC branch of the ATP binding cassette (ABC) transporter superfamily that can confer resistance to natural product chemotherapeutic drugs and transport a variety of conjugated organic anions, as well as some unconjugated compounds in a glutathione- (GSH-) dependent manner. In addition to the two tandemly repeated polytopic membrane-spanning domains (MSDs) typical of ABC transporters, MRP1 and its homologues MRP2, -3, -6, and -7 contain a third NH(2)-terminal MSD. The cytoplasmic loop (CL3) connecting this MSD, but apparently not the MSD itself, is required for MRP1 leukotriene C(4) (LTC(4)) transport activity, substrate binding and appropriate trafficking of the protein to the basolateral membrane. We have used a baculovirus dual-expression system to produce various functionally complementing fragments of MRP1 in insect Sf21 cells to precisely define the region in CL3 that is required for activity and substrate binding. Using a parallel approach in polarized MDCK-I cells, we have also defined the region of CL3 that is required for basolateral trafficking. The CL3 NH(2)- and COOH-proximal functional boundaries have been identified as Cys(208) and Asn(260), respectively. Cys(208) also corresponds to the NH(2)-proximal boundary of the region required for basolateral trafficking in MDCK-I cells. However, additional residues downstream of the CL3 COOH-proximal functional boundary extending to Lys(270) were found to be important for basolateral localization. Finally, we show that regions in CL3 necessary for LTC(4) binding and transport are also required for binding of the photoactivatable GSH derivative azidophenacyl-GSH.