Chondromodulin-I (ChM-I) is a small glycoprotein that is abundant in fetal cartilage. Mature chondromodulin-I is processed from a larger precursor form, presumably at a proteolytic site RERR-ELVR. The precursor, mature chondromodulin-I and two processed products, the remnant left after removal of mature chondromodulin-I and a smaller, unglycosylated form, were identified using antipeptide antisera. The products of chondromodulin-I precursor processing were seen in cultured chondrocytes, a stable long-term culture chondrosarcoma cell line, as well as Chinese hamster ovary (CHO) cells transfected with an expression plasmid that contained cDNA coding for the chondromodulin-I precursor. Pulse-chase analysis allowed a processing pathway to be analyzed for chondromodulin-I. To further dissect the processing events, three constructs that express recombinant wild-type or mutant chondromodulin-I were transfected into CHO cells. We showed that chondromodulin-I is cleaved intracellularly at the predicted cleavage site, and that the mature glycopeptide is rapidly secreted immediately after processing. The chondromodulin-1 precursor has a short half-life and is not readily apparent in tissue samples, suggesting that chondromodulin is not a member of the juxtacrine family of growth factors, despite some similarities. The smaller unglycosylated form of chondromodulin-I was only observed in cartilage and not in short-term cultures or transfected cells, suggesting an extracellular processing event. No processing occurred when the precursor cleavage site was mutated to RERQ-SLVR or when precursor chondromodulin-I was expressed in the furin-deficient CHO cell line, suggesting the involvement of furin in processing.