Surfactant protein B (SP-BThe 8-kDa protein is the result of extensive post-translational processing of a large 381-amino acid precursor within alveolar type 2 cells. Previous studies in cell lines, isolated rat type 2 cells, and human fetal lung (2-7) indicated that processing to the mature 8-kDa protein involves signal peptide cleavage and glycosylation of the C terminus, followed by cleavage of the N terminus and C terminus in succession. We have recently shown that cleavage of the N terminus occurs in two steps, leaving an approximately 10-amino acid remnant flanking mature SP-B which is removed in a final processing step that releases mature SP-B (8). The subcellular location of these processing events and the enzymes necessary for processing SP-B are poorly understood. Previous work by Voorhout and colleagues (9) utilizing immunoelectron microscopy with antisera to mature SP-B and a synthetic pro-SP-B showed pro-SP-B in the endoplasmic reticulum and mature SP-B in lamellar bodies of adult human type 2 cells. Analysis of grain density over other organelles showed intermediate grain densities over multivesicular bodies and Golgi, indicating the involvement of these organelles in SP-B transport and/or processing.The extensive post-translational processing of SP-B is similar to the post-translational processing of the other hydrophobic surfactant protein, SP-C (10 -13). The 21-kDa pro-SP-C undergoes sequential enzymatic cleavages resulting in a 3.7-kDa mature protein. Pro-SP-C is detected in endoplasmic reticulum and a 6-kDa intermediate is enriched in lamellar bodies. Inhibitors of intracellular trafficking and acidification in vitro disrupt all processing beyond the 16-kDa SP-C intermediate. Processing of SP-B and SP-C are linked, since in alveolar type 2 cells of patients with inherited SP-B deficiency SP-C is not processed beyond the 6-kDa intermediate (14,15).In this report, we use epitope-specific antisera and pulsechase labeling studies with inhibitors of protein processing to show that most human pro-SP-B processing is in post-endoplasmic reticulum but pre-lamellar body compartments. Our data extend previous observations of pro-SP-B trafficking and processing to show that early N-terminal propeptide and Cterminal propeptide processing events occur within the Golgi apparatus with processing of the small vestigial N-terminal propeptide domain as a post-Golgi event. We speculate that the N-terminal remnant is involved in trafficking SP-B toward the lamellar body. Previous reports of these data have appeared elsewhere in abstract form (16,17).