Proteases within secretory vesicles are required for conversion of neuropeptide precursors into active peptide neurotransmitters and hormones. This study demonstrates the novel cellular role of the cysteine protease cathepsin L for producing the (Met)enkephalin peptide neurotransmitter from proenkephalin (PE) in the regulated secretory pathway of neuroendocrine PC12 cells. These findings were achieved by coexpression of PE and cathepsin L cDNAs in PC12 cells with analyses of PE-derived peptide products. Expression of cathepsin L resulted in highly increased cellular levels of (Met)enkephalin, resulting from the conversion of PE to enkephalin-containing intermediates of 23, 18-19, 8-9, and 4.5 kDa that were similar to those present in vivo. Furthermore, expression of cathepsin L with PE resulted in increased amounts of nicotine-induced secretion of (Met)enkephalin. These results indicate increased levels of (Met)enkephalin within secretory vesicles of the regulated secretory pathway. Importantly, cathespin L expression was directed to secretory vesicles, demonstrated by colocalization of cathepsin L-DsRed fusion protein with enkephalin and chromogranin A neuropeptides that are present in secretory vesicles. In vivo studies also showed that cathepsin L in vivo was colocalized with enkephalin. The newly defined secretory vesicle function of cathepsin L for biosynthesis of active enkephalin opioid peptide contrasts with its function in lysosomes for protein degradation. These findings demonstrate cathepsin L as a distinct cysteine protease pathway for producing the enkephalin member of neuropeptides.