Soluble proteins are enriched in the endoplasmic reticulum (ER) by retrograde transport from the Golgi that is mediated by the KDEL receptors. In addition to the classic carboxyl-terminal KDEL motif, a variety of sequence variants are also capable of receptor binding that result in ER localization. Although different ER localization signals that exhibit varying affinities for the KDEL receptors exist, whether there are functional implications was unknown. The present study determines whether AGR2 requires a specific ER localization signal to be functionally active. AGR2 is expressed in most human adenocarcinomas and serves a role in promoting growth and the transformed phenotype. Using two different cell lines in which AGR2 induces expression of either the EGFR ligand amphiregulin or the transcription factor CDX2, only the highly conserved wild-type carboxyl-terminal KTEL motif results in the appropriate outcome. Deletion of the KTEL motif results in AGR2 secretion and loss of AGR2 function. AGR2 function is also lost when ER residence is achieved with a carboxyl-terminal KDEL or KSEL instead of a KTEL motif. Thus variations in ER localization sequences may serve a specific functional role, and in the case of AGR2, this role is served specifically by KTEL.