In many organisms, sophisticated mechanisms facilitate release of peptides in response to extracellular stimuli. In the ciliate Tetrahymena thermophila, efficient peptide secretion depends on specialized vesicles called mucocysts that contain dense crystalline cores that expand rapidly during exocytosis. Core assembly depends of endoproteolytic cleavage of mucocyst proproteins by an aspartyl protease, cathepsin 3 (CTH3). Here, we show that a second enzyme identified by expression profiling, Cth4p, is also required for processing of proGrl proteins and for assembly of functional mucocysts. Cth4p is a cysteine cathepsin that localizes partially to endolysosomal structures and appears to act downstream of, and may be activated by, Cth3p. Disruption of CTH4 results in cells (⌬cth4) that show aberrant trimming of Grl proproteins, as well as grossly aberrant mucocyst exocytosis. Surprisingly, ⌬cth4 cells succeed in assembling crystalline mucocyst cores. However, those cores do not undergo normal directional expansion during exocytosis, and they thus fail to efficiently extrude from the cells. We could phenocopy the ⌬cth4 defects by mutating conserved catalytic residues, indicating that the in vivo function of Cth4p is enzymatic. Our results indicate that as for canonical proteins packaged in animal secretory granules, the maturation of mucocyst proproteins involves sequential processing steps. The ⌬cth4 defects uncouple, in an unanticipated way, the assembly of mucocyst cores and their subsequent expansion and thereby reveal a previously unsuspected aspect of polypeptide secretion in ciliates. R egulated secretion of peptides from intracellular stores plays many key roles in intercellular communication and tissue coordination in animals (1). A highly specialized organelle in neuroendocrine cells, the secretory granule, is required for peptide generation, storage, and release (2). The bioactive peptides are generated during secretory granule formation by the action of proteolytic enzymes on polypeptide precursors (3). Proteolytic processing occurs in a post-trans-Golgi network (TGN) compartment, the immature granule, to which propeptides are sorted away from bulk protein traffic, and is a multistep process involving several classes of enzymes (4-6). The best studied among these are a family of serine proteases called prohormone convertases (7). Related to bacterial subtilisins, prohormone convertases (PCs) catalyze endoproteolytic cleavage at defined motifs in their substrates. The products of that cleavage can then undergo trimming, for which one important factor is carboxypeptidase E (CPE) (8). Defects in both PCs and CPE are linked with disease (9, 10).Signaling via peptide secretion appears to be widespread in eukaryotes and has also been well documented for fungi, amoebozoa, and plants(11-13). In the oligohymenophorean ciliates Tetrahymena thermophila and Paramecium tetraurelia, regulated peptide secretion occurs from organelles that share striking similarities with secretory granules in animals (14, 15), although...