Subtilisin kexin isozyme-1 (SKI-1) represents the first mammalian member of secretory subtilisin-like processing enzymes that cleaves after nonbasic residues. It is synthesized as an inactive precursor that undergoes three sequential autocatalytic processing steps of its N-terminal prosegment and an ectodomain shedding at a site near the transmembrane domain. The various cellular functions of SKI-1 emphasize the need to understand the sites of its activation and shedding. We have previously shown that SKI-1 undergoes autocatalytic shedding at the sequence KHQKLL 953 2, resulting in a membrane-bound stump called St-1 (amino acids 954 -1052). However, little is known about the cellular localization of SKI-1 or its shed forms. In the present study, we have further identified a smaller C-terminal fragment St-2 generated closer to the transmembrane domain. By sequencing and mass spectrometric analysis, the start site and the molecular mass of St-2 were determined. Site-directed mutagenesis revealed the critical amino acid involved in this novel process. Mutation of Met 990 to M990A, M990I, and M990L failed to generate St-2, suggesting an internal alternate translation event at Met 990 , as confirmed by an in vitro transcription/translation assay. Confocal microscopy defined the subcellular localization of SKI-1 and its fragments. The data show that most of membrane-bound SKI-1 and its stumps St-1 and St-2 localize to the Golgi and can enter the endosomal/lysosomal compartments but do not sort to the cell surface. Deletion studies showed that the transmembrane domain of SKI-1 determines its trafficking. Finally, rSt-1 and rSt-2 seem to affect the processing of ATF6 by SKI-1, but cellular stress does not regulate the production of St-2.Several secretory proteins are synthesized as inactive precursors, which when converted to their mature forms by proteolytic enzymes generate a large diversity of bioactive proteins and peptides. The nine-member family of the proprotein convertases (PCs) 2 participates actively in the generation of such molecular diversity (1-3). There are seven basic amino acidspecific kexin-like mammalian proprotein convertases that cleave various precursors at the general consensus motif (K/R)X n (K/R)2, where n ϭ 0, 2, 4, or 6, and X represents any amino acid. The eighth member is the pyrolysin-like subtilisin kexin isozyme-1 (SKI-1) (4), also known as site-1 protease (S1P) (5). It cleaves substrates at the consensus motif (R/K)X-(hydrophobic)-X2, where X is variable (6). The last member PCSK9 cleaves the sequence VFAQ 152 2 within its prosegment (7). SKI-1 represents the first mammalian member of secretory subtilisin-like processing enzymes that cleaves after nonbasic residues (2, 3). The ubiquitously expressed convertase SKI-1 (4) regulates the synthesis of cholesterol and fatty acids and their metabolism, through the processing of the membrane-bound transcription factors sterol regulatory element-binding proteins (8, 9). It also regulates endoplasmic reticulum (ER)-stress response through cleavag...