The mechanism of yolk deposition into developing oocytes of Drosophila was investigated by following the fate of a reporter protein fused to a vitellogenin, or yolk polypeptide (YP). Embryos were transformed with a hybrid gene consisting of the promotor and amino terminal 430 codons of the Yp2 gene fused to the cytoplasmic form of the invertase gene from the yeast Saccharomyces cerevisiae. RNA hybridization experiments with established lines of transformed flies showed that the hybrid gene was expressed in female fat bodies and ovaries but not in any male cells. Immunoblotting and endoglycosidase digestion showed that the hybrid protein was secreted from fat body cells via the secretory pathway, transported in hemolymph, and sequestered into developing oocytes. Transfusion experiments with hemolymph and pure invertase showed that sequestration of invertase depended on its attachment to YP. Immunocytochemistry demonstrated that the hybrid protein became localized in yolk granules as oocytes developed. Females homozygous for the fusion gene are generally sterile; their eggs containing the hybrid protein often collapse and their embryos fail to develop, suggesting that the structure of the yolk polypeptides is important for embryonic development. These experiments show that YP2 carries structural information sufficient to direct a reporter protein from fat body cells, through the hemolymph, and into the yolk granules of developing oocytes. This work provides a means of identifying the features of yolk polypeptides that are responsible for their deposition into yolk during oogenesis.