Differential targeting of myelin proteins to multiple, biochemically and functionally distinct Schwann cell plasma membrane domains is essential for myelin formation. In this study, we investigated whether the myelin protein P0 contains targeting signals using Madin-Darby canine kidney (MDCK) cells. By confocal microscopy, P0 was localized to MDCK cell basolateral membranes. C-terminal deletion resulted in apical accumulation, and stepwise deletions defined a 15-mer region that was required for basolateral targeting. Alanine substitutions within this region identified the YAML sequence as a functional tyrosine-based targeting signal, with the ML sequence serving as a secondary leucine-based signal. Replacement of the P0 ectodomain with green fluorescent protein altered the distribution of constructs lacking the YAML signal. Coexpression of the myelin-associated glycoprotein did not alter P0 distribution in MDCK cells. The results indicate that P0 contains a hierarchy of targeting signals, which may contribute to P0 localization in myelinating Schwann cells and the pathogenesis in human disease.