Calcium-activated neutral proteinase (CANP) activity was determined in cytosolic and membranous subcellular fractions of transformed Schwann cells (tSc). The muM and mM Ca(2+)-sensitive (mu- and mCANP) forms of CANP were separated by DEAE and phenyl Sepharose column chromatography, the latter step enabling removal of the endogenous inhibitor calpastatin. The tSc contained more muCANP than the mM isoform. More than 75% of mCANP activity was membrane-associated and 20% was cytosolic. In contrast, approximately 80% of muCANP was cytosolic and 15% was membranous. Triton X-100 stimulated activity of the whole homogenate and of the membrane pellet but did not stimulate CANP activity in the cytosolic fraction. Immunohistochemical distribution of mM enzyme was studied in both fixed and permeabilized tSc with cytosolic (anti-cyt-mCANP) and myelin (anti-my-mCANP) antibodies. Live cells (non-permeabilized) stained with anti-my-mCANP had a single filamentous ring circumscribing individual cells. Permeabilized cells treated with anti-my-mCANP had immunoreactive deposits throughout the intracellular space but sparing the perinuclear region. No immunohistochemical staining was detected when live cells were exposed to anti-cyt-mCANP whereas permeabilized cells had extensive intracellular staining with the most intense immunoreactivity in the perinuclear region. Our results indicate that both forms of CANP are present in tSc and that the activity of most of the muCANP is cytosolic while mCANP is particulate.