PC3, a mammalian homologue of the yeast subtilisin-like proteinase Kex2, was expressed in Xenopus oocytes and its activity was characterized. PC3 cleaved human proinsulin at one of the two dibasic sites (KTRR32 but not LQKR65). The specificity, inhibitor profile, pH optimum (5.5) and Ca(2+)-dependence (K0.5 = 2.5-3 mM) paralleled those of the insulin-granule type 1 endopeptidase activity, suggesting a role for PC3 in the conversion of prohormones.