Inherited defects in the RDS gene cause a multiplicity of progressive retinal diseases in humans. The gene product, peripherin/rds (P/rds), is a member of the tetraspanin protein family required for normal vertebrate photoreceptor outer segment (OS) architecture. Although its molecular function remains uncertain, P/rds has been suggested to catalyze membrane fusion events required for the OS renewal process. This study investigates the importance of two charged residues within a predicted C-terminal helical region for protein biosynthesis, localization, and interaction with model membranes. Targeted mutagenesis was utilized to neutralize charges at Glu321 and Lys324 individually and in combination to generate three mutant variants. Studies were conducted on variants expressed as 1) full-length P/rds in COS-1 cells, 2) glutathione S-transferase fusion proteins in Escherichia coli, and 3) membrane-associated green fluorescent protein fusion proteins in transgenic Xenopus laevis. None of the mutations affected biosynthesis of full-length P/rds in COS-1 cells as assessed by Western blotting, sedimentation velocity, and immunofluorescence microscopy. Although all mutations reside within a recently identified localization signal, none altered the ability of this region to direct OS targeting in transgenic X. laevis retinas. In contrast, individual or simultaneous neutralization of the charged amino acids Glu321 and Lys324 abolished the ability of the C-terminal domain to promote model membrane fusion as assayed by lipid mixing. These results demonstrate that, although overlapping, C-terminal determinants responsible for OS targeting and fusogenicity are separable and that fusogenic activity has been uncoupled from other protein properties. The observation that subunit assembly and OS targeting can both proceed normally in the absence of fusogenic activity suggests that properly assembled and targeted yet functionally altered proteins could potentially generate pathogenic effects within the vertebrate photoreceptor.