Microbial biofilms represent heterogeneous populations of cells that form intimate contacts. Within these populations cells communicate, cooperate and compete. Myxobacteria are noted for their complex social interactions, including gliding motility and lipoprotein exchange. Here, we investigated cis protein sequence and cellular behaviour requirements for lipoprotein transfer between Myxococcus xanthus cells. Specifically, an outer membrane (OM) type II signal sequence (SS) fused to the heterologous mCherry fluorescent reporter resulted in OM localization. When donor cells harbouring SSOM–mCherry were mixed with GFP-labelled recipient cells they developed red fluorescence. Our results surprisingly showed that a type II SS for OM localization, but not inner membrane localization, was necessary and sufficient for rapid and efficient heterologous protein transfer. Importantly, transfer did not occur in liquid or on surfaces where cells were poorly aligned. We conclude that cell–cell contact and alignment is a critical step for lipoprotein exchange. We hypothesize that protein transfer facilitates cooperative myxobacteria behaviours.