SH-EP is a cysteine protease from germinating mung bean (Vigna mungo) that possesses a carboxyl-terminal endoplasmic reticulum (ER) retention sequence, KDEL. In order to examine the function of the ER retention sequence, we expressed a full-length cDNA of SH-EP and a minus-KDEL control in insect Sf-9 cells using the baculovirus system. Our observations on the synthesis, processing, and trafficking of SH-EP in Sf-9 cells suggest that the KDEL ER-retention sequence is posttranslationally removed either while the protein is still in the ER or immediately after its exit from the ER, resulting in the accumulation of proSH-EP minus its KDEL signal. It is this intermediate form that appears to progress through the endomembrane system and is subsequently processed to form mature active SH-EP. The removal of an ER retention may regulate protein delivery to a functional site and present an alternative role for ER retention sequences in addition to their well established role in maintaining the protein composition of the ER lumen.SH-EP is a thiol protease expressed in germinating mung bean (Vigna mungo) cotyledons (1-3) that is among a large number of similar cysteine proteases that are synthesized after germination in order to degrade seed storage proteins (2, 4 -10). All cysteine proteases are initially synthesized as larger precursor proteins with NH 2 -terminal prodomains of approximately 120 amino acids (11). The prodomain is an inhibitor of the protease (12) and is essential in the correct folding of the protein (13). Processing of the proenzyme occurs by self-catalysis (14) in post-Golgi compartments of the secretory system. With intracellular proteases, this processing occurs in the lytic compartment (lysosomes or vacuoles) (15); with extracellular proteases, the processing occurs during secretion (16). Targeting to the correct compartment for processing is mediated by a peptide (17) or phosphomannose (18) targeting signal on the NH 2 -terminal precursor domain that is recognized by a specific receptor that is presumed to be localized in the Golgi apparatus (19,20) to target the protein to the activating compartment.SH-EP is unusual because it and a few closely related thiol proteases (21-23) are the only cysteine proteases known to possess a carboxyl-terminal ER 1 retention sequence KDEL (24 -26). Although papain superfamily proteases are widely distributed among eukaryotes (27, 28), only these plant cysteine proteases have been identified as possessing a carboxylterminal ER retention sequence. Several other legume cysteine proteases have been cloned that do not possess a KDEL tail (28 -34), indicating that even among legumes and more broadly in plants these KDEL-proteases appear to constitute a special class. Plant cells utilize both HDEL and KDEL as ER retention sequences (35)(36)(37)(38). The presence of a carboxyl-terminal KDEL in SH-EP raises a question as to whether this sequence is functional in vivo. A papain superfamily cysteine protease would appear to be an unusual putative constituent of the ER lumen, ...