Membrane-associated and soluble forms of folate binding protein (FBP) have been identified in mammalian tissues and biological fluids. Despite their solubility differences, these two forms are functionally similar, immunologically cross-reacting, and have the same apparent molecular weights. In this study we demonstrate, for the first time, that the membrane FBP of cultured human KB cells contains a glycosyl-phosphatidylinositol (GPI) tail which is responsible for its hydrophobic properties and distinguishes it from the soluble FBP released into the medium. Treatment of the purified membrane FBP with phospholipase C specific for phosphatidylinositol (PI-PLC) removed the GPI tail and converted it to the soluble form without a change in apparent M_r by sodium dodecyl sulfate-polyacrylamide gel electrophoresis. In addition, virtually all of the folate binding sites on the plasma membrane of the intact cells were released as soluble, functional FBP following treatment with PI-PLC. The GPI tail contained 1-O-alkyl-2-O-acylglycerol as a mixture of fatty alcohols in ether linkage at C1 of the glycerol backbone and almost exclusively docosanoic acid (22:0) as the fatty acid on C2. The inositol also contained a mixture of fatty acids (16:0, 18:0, 18:1, 20:4, 22:0) located on a site other than the C2 position since the FBP was susceptible to PI-PLC cleavage. After nitrous acid deamination, the aqueous portion of the FBP contained covalently bound fatty acids, predominantly palmitate (16:0) and stearate (18:0), indicating the presence of additional acyl groups attached to the peptide in the form of amide, ester, or thioester linkage.