The inositol moiety of mammalian glycosylphosphatidylinositol (GPI) is acylated at an early step in GPI biosynthesis. The inositol acylation is essential for the generation of mature GPI capable of attachment to proteins. However, the acyl group is usually absent from GPI-anchored proteins (GPI-APs) on the cell surface due to inositol deacylation that occurs in the endoplasmic reticulum (ER) soon after GPI-anchor attachment. Mammalian GPI inositol-deacylase has not been cloned, and the biological significance of the deacylation has been unclear. Here we report a GPI inositol-deacylase-deficient Chinese hamster ovary cell line established by taking advantage of resistance to phosphatidylinositol-specific phospholipase C and the gene responsible, which was termed PGAP1 for Post GPI Attachment to Proteins 1. PGAP1 encoded an ER-associated, 922-amino acid membrane protein bearing a lipase consensus motif. Substitution of a conserved putative catalytic serine with alanine resulted in a complete loss of function, indicating that PGAP1 is the GPI inositol-deacylase. The mutant cells showed a clear delay in the maturation of GPI-APs in the Golgi and accumulation of GPI-APs in the ER. Thus, the GPI inositol deacylation is important for efficient transport of GPI-APs from the ER to the Golgi.