Thyroid peroxidase (TPO1) is a membrane-bound heme-containing glycoprotein that catalyzes the synthesis of thyroid hormones. We generated stable cell lines expressing TPO1 and the alternatively spliced isoform TPO2. Pulse-chase studies showed that TPO2 half-life was dramatically decreased as compared with TPO1. The sensitivity of TPO2 to endo-beta-N-acetylglucosaminidase H indicated that the protein is processed through the endoplasmic reticulum and bears high mannose-type structures. Cell surface biotinylation experiments showed that the two isoforms also differ in their intracellular trafficking. TPO2 was totally retained in the cell, whereas 15% of TPO1 reached the cell surface. The inability of TPO2 to come out of the intracellular compartments was related to structural changes in the molecule. Evidence of these changes was obtained through the lack of recognition of TPO2 by half of the 13 TPO monoclonal antibodies tested in immunoprecipitation experiments. Our data suggest that because of an improper folding, TPO2 is trapped in the endoplasmic reticulum and rapidly degraded. The failure of incorporation of [14C]aminolevulinic acid in the cultured cells showed that TPO2 did not bind to heme, whereas TPO1 did. This result was confirmed through a guaiacol assay showing that TPO2 is enzymatically inactive.