The prlC gene product of Escherichia coli can be altered by mutation so that it restores export of proteins with defective signal sequences. The strongest suppressor, prlC8, restores processing of a mutant signal sequence to a rate indistinguishable from the wild-type. Data obtained by changing gene dosage of the dominant suppressor and its specificity for different signal sequence mutations suggest that PrlC8 interacts directly with the hydrophobic core of the signal sequence. Despite the fact that signal sequence processing appears to be mediated by leader peptidase, the processed mature protein is not translocated efficiently from the cytoplasm. Results obtained with various double mutants indicate that PrlC8-mediated processing of mutant signal sequences does not require components of the cellular export machinery such as SecA, SecB or PrlA (SecY) and that the block in translocation from the cytoplasm occurs because PrlA (SecY) fails to recognize the defective signal sequence. We suggest that PrlC8 directs insertion of the mutant signal sequence into the membrane bilayer to an extent that processing by leader peptidase can occur. This reaction is novel in that it has not been observed previously in vivo.