The transferrin receptor (TfR) is the plasma membrane protein responsible for the binding and internalization of the major iron- transport protein, transferrin. The function of the single O-linked oligosaccharide near the transmembrane domain of the TfR at amino acid Thr 104 is unknown. To elucidate the effect of the O-linked carbohydrate on TfR function, the oligosaccharide was eliminated by replacing Thr 104 with Asp and the mutated cDNA was expressed in a cell line lacking endogenous TfR. Elimination of the oligosaccharide at Thr 104 results in a form of the receptor that is susceptible to cleavage. A 78-kD soluble TfR that can bind transferrin is released into the growth medium. The intact mutant TfR is not grossly altered in its structure and does not differ significantly from the wild-type human receptor in many respects: (1) It shows the same distribution between the plasma membrane and intracellular compartments; (2) the binding constant for transferrin is similar to that of the wild-type TfR; and (3) it is not rapidly degraded. Protein-sequence analysis of the soluble form indicates that the sequence begins at amino acid 101 of the intact receptor. This is the same cleavage site reported for a soluble form of normal receptor found in human serum. Substitution of Gly, Glu, or Met at position 104 also results in increased cleavage of the TfR and suggests that elimination of the O-linked carbohydrate at position 104 enhances the susceptibility of TfR to cleavage and may mimic a naturally occurring process previously described as being related to erythropoiesis.