The prohormone convertases (PCs) are synthesized as zymogens whose propepti
des contain several multibasic sites. In this study, we investigated the pr
ocessing of the PC2 propeptide and its function in the regulation of PC2 ac
tivity. By using purified pro-PC2 and directed mutagenesis, we found that t
he propeptide is first cleaved at the multibasic site separating it from th
e catalytic domain (primary cleavage site); the intact propeptide thus gene
rated is then sequentially processed at two internal sites. Unlike the mech
anism described for furin, our mutagenesis studies show that internal cleav
age of the propeptide is not required for activation of pro-PCS, In additio
n, we identified a point mutation in the primary cleavage site that does no
t prevent the folding nor the processing of the zymogen but nevertheless re
sults in the generation of an inactive PC2 species. These data suggest that
the propeptide cleavage site is directly involved in the folding of the ca
talytic site. By using synthetic peptides, we found that a PC2 propeptide f
ragment inhibits PC2 activity, and we identified the inhibitory site as the
peptide sequence containing basic residues at the extreme carboxyl terminu
s of the primary cleavage site. Finally, our study supplies information con
cerning the intracellular fate of a convertase propeptide by providing evid
ence that the PC2 propeptide is generated and is internally processed withi
n the secretory granules, In agreement with this localization, an internall
y cleaved propeptide fragment could be released by stimulated secretion.