Matrix Gla protein (MGP), a low molecular weight protein found in bone, dentin, and cartilage, contains 5 residues of the vitamin K-dependent amino acid gamma-carboxyglutamic acid (Gla). We have used antibodies raised against MGP and oligonucleotide probes to screen a lambda gt11 cDNA library constructed from the rat osteosarcoma cells (line ROS 17/2) that had been pretreated with 1 alpha,25-dihydroxyvitamin D3. By sequencing several cloned cDNAs, we established a 523-base-pair sequence that predicts an 84-residue mature MGP and a 19-residue hydrophobic signal peptide. The 84-residue mature rat MGP predicted from the cDNA sequence has an additional 5 residues at its C terminus (-Arg-Arg-Gly-Ala-Lys) not seen in the sequence of MGP isolated from bovine bone. The structure of rat MGP provides insight into the mechanisms by which the vitamin K-dependent gamma-carboxylase recognizes substrate. The present studies show that MGP, unlike other vitamin K-dependent proteins, lacks a propeptide. The absence of an MGP propeptide demonstrates that gamma-carboxylation and secretion of vitamin K-dependent proteins need not be linked to the presence of a propeptide or to its proteolytic removal. The propeptides of other vitamin K-dependent proteins are structurally homologous, and there is evidence that this homologous propeptide domain is important to substrate recognition by the gamma-carboxylase. Mature MGP has a sequence segment (residues 15-30) that is homologous to the propeptide of other vitamin K-dependent proteins and probably serves the same role in gamma-carboxylase recognition. Rat MGP also has a second sequence that has recently been identified in all known vitamin K-dependent vertebrate proteins, the invariant unit Glu-Xaa-Xaa-Xaa-Glu-Xaa-Cys (EXXXEXC). Since the glutamic residues in this unit are sites of gamma-carboxylation, it has been suggested that the EXXXEXC unit could allow the gamma-carboxylase to discriminate between substrate and product. The demonstration that two structures common to vitamin K-dependent proteins, the homologous propeptides domain and the invariant EXXXEXC unit, are in mature MGP indicates that des-gamma-carboxy-MGP should be an excellent in vitro gamma-carboxylase substrate for analysis of mechanisms involved in substrate recognition and product dissociation.