We have recently shown that furin, a mammalian homologue of the yeast precursor-processing endoprotease Kex2, is involved in precursor cleavage at sites marked by the Arg-X-Lys/Arg-Arg motif within the constitutive secretory pathway. In this study, we analyzed molecular and enzymatic properties of furin expressed in Chinese hamster ovary cells using gene transfer techniques. COOH-terminal truncation analyses indicate that the polypeptide region significantly conserved among the Kex2 family members is required for the endoprotease activity of furin, while the COOH-terminal unconserved region containing the Cys-rich domain and the transmembrane domain is dispensable. A mutant of furin truncated up to the transmembrane domain from the COOH-terminus was secreted into the culture medium as an active form. The sequence requirements for precursor cleavage of this truncated furin determined in vitro were similar to those of wild-type furin determined by expression studies in cultured cells. It had a strong resemblance to the Kex2 protease in the inhibitor profile and pH dependency. These observations support the notion that furin is the endogenous endoprotease involved in precursor cleavage at Arg-X-Lys/Arg-Arg sites.