Diphtheria toxin binds to receptor-positive cells through its B-fragment, the toxin is then endocytosed, and the low pH in endosomes triggers the translocation of the enzymatically active A-fragment to the cytosol. A synchronous release of A-fragments into the cytosol can be induced by exposing cells with surface-bound toxin to low pH. We have used this protein translocation system to develop a novel method to study whether or not a protein is exposed to the cytosol. Protein farnesylation is a cytosolic modification signaled by a C-terminal CaaX motif, and to visualize the translocation process, we added a farnesylation signal to the toxin A-fragment. The A-fragment with an added CaaX motif was farnesylated within 1 h after exposure of cells with surface-bound toxin to low pH, and also A-fragment translocated from endosomes was quantitatively farnesylated. The results indicate that all cell-mediated reduction of the toxin implicates translocation of the A-fragment to the cytosol. The farnesylation was inhibited by lovastatin, the alkylating agent NEM, and the peptidomimetic farnesylation inhibitor B581. Farnesylated A-fragment partitioned preferentially into the detergent phase upon extraction with Triton X-114. Our data suggest that farnesylation of a CaaX tag is generally applicable as a cytosolic marker, and this strategy for monitoring protein transfer to the cytosol may have considerable potential for studying the transport to the cytosol of proteins added externally to cells.