Proteins terminating with a CAAX motif, such as the Ras proteins and the nuclear lamins, undergo posttranslational modification of a C-terminal cysteine with an isoprenyl lipid via a process called protein prenylation. After prenylation, the last three residues of CAAX proteins are clipped off by Rce1, an integral membrane endoprotease of the endoplasmic reticulum. Prenylation is crucial to the function of many CAAX proteins, but the physiologic significance of endoproteolytic processing has remained obscure. To address this issue, we used Cre/loxP recombination techniques to create mice lacking Rce1 in the heart, an organ where Rce1 is expressed at particularly high levels. The hearts from heart-specific Rce1 knockout mice manifested reduced levels of both the Rce1 mRNA and CAAX endoprotease activity, and the hearts manifested an accumulation of CAAX protein substrates. The heart-specific Rce1 knockout mice initially appeared healthy but died starting at 3-5 months of age. By 10 months of age, ϳ70% of the mice had died. Pathological studies revealed that the heartspecific Rce1 knockout mice had a dilated cardiomyopathy. By contrast, liver-specific Rce1 knockout mice appeared healthy, had normal transaminase levels, and had normal liver histology. These studies indicate that the endoproteolytic processing of CAAX proteins is essential for cardiac function but is less important for the liver.Proteins terminating with a CAAX 1 motif, such as the nuclear lamins and the Ras and Rho proteins, undergo three sequential post-translational processing steps (1-4). First, the C-terminal cysteine (i.e. the C of the CAAX motif) is "lipidated" with a 15-carbon farnesyl or a 20-carbon geranylgeranyl lipid. This processing step is carried out by cytosolic prenyltransferases (protein farnesyltransferase and protein geranylgeranyltransferase type I). Second, a prenylprotein-specific endoprotease of the endoplasmic reticulum, Ras-converting enzyme 1 (Rce1), clips off the last three amino acids from the protein (i.e. the -AAX) (5-7). Third, the newly exposed C-terminal isoprenylcysteine is methylesterified by isoprenylcysteine carboxyl methyltransferase (Icmt), a prenylprotein-specific, S-adenosylmethionine-dependent methyltransferase of the endoplasmic reticulum (8 -11).Prenylation of CAAX proteins is vitally important to eukaryotic cells (1-4). Yeast lacking the shared ␣-chain of farnesyltransferase and geranylgeranyltransferase type I are not viable (12). In mammalian cells, prenylation of CAAX proteins is absolutely required for their proper targeting to membrane surfaces and for proper protein function (1-4). The importance of protein farnesylation is clearly indicated by the fact that mice lacking farnesyltransferase die early during embryonic development (before embryonic day 6.5). 2 The geranylgeranylation of CAAX proteins is also critical for normal cellular function. Drugs that inhibit geranylgeranylation of CAAX proteins have pronounced effects on cell growth and can trigger apoptosis (13-15). Further underscoring the im...