Sarcolipin (SLN) and phospholamban (PLN) are effective inhibitors of the sarco(endo)plasmic reticulum Ca(2+)-ATPase (SERCA). These homologous proteins differ at their N and C termini: the C-terminal Met-Leu-Leu in PLN is replaced by Arg-Ser-Tyr-Gln-Tyr in SLN. The role of the C-terminal sequence of SLN tagged N-terminally with the FLAG epitope (NF-SLN) in endoplasmic reticulum (ER) retention was investigated by transfecting human embryonic kidney-293 cells with cDNAs encoding NF-SLN or a series of NF-SLN mutants in which C-terminal amino acids were deleted progressively. Immunofluorescence and immunoblotting of transfected cells by using anti-FLAG antibodies indicated that NF-SLN and PLN tagged at its N terminus with the FLAG epitope, even when overexpressed, were restricted to the ER. However, C-terminal truncation deletions of SLN, which lacked RSYQY, were not localized to ER and did not inhibit Ca(2+)-dependent Ca2+ uptake by SERCA. The shortest deletion constructs, NF-SLN 1-22 and NF-SLN 1-23, did not express stable protein products. However, all NF-SLN cDNA constructs, including NF-SLN 1-22 and NF-SLN 1-23, were expressed stably and localized to the ER when they were coexpressed with SERCA2a. These results show that NF-SLN subcellular distribution depends on SERCA coexpression and on its luminal, C-terminal RSYQY sequence. By using immunoprecipitation and MS, glucose-regulated protein 78/BiP and glucose-regulated protein 94 were identified as proteins that interact with NF-SLN through the RSYQY sequence. Thus, in the absence of SERCA, retention of NF-SLN in the ER is mediated through its association with other components through the C-terminal RSYQY sequence.