N-arginine (R) dibasic (NRD) convertase (nardilysin; EC 3.4.24.61), a metalloendopeptidase of the M16 family, specifically cleaves peptide substrates at the N-terminus of arginines in dibasic motifs in vitro. In rat testis, the enzyme localizes within the cytoplasm of spermatids and associates with microtubules of the manchette and axoneme. NRD1 and NRD2 convertases, two NRD convertase isoforms, differ by the absence (isoform 1) or presence (isoform 2) of a 68-amino acid insertion close to the active site. In this study, we overexpressed both isoforms, either by vaccinia virus infection of BSC40 cells or transfection of COS-7 cells. The partially purified enzymes exhibit very similar biochemical and enzymic properties. Microsequencing revealed that NRD convertase is N-terminally processed. Results of immunocytofluorescence, immunoelectron microscopy and subcellular fractionation studies argue in favour of a primary cytosolic localization of both peptidases. Although the putative signal peptide did not direct NRD convertase into microsomes in an in vitro translation assay, biotinylation experiments clearly showed the presence of both isoforms at the cell surface. In conclusion, although most known processing events at pairs of basic residues are achieved by proprotein convertases within the secretory pathway, NRD convertase may fulfil a similar function in the cytoplasm and/or at the cell surface.