In this report we describe a series of experiments designed to probe the biosynthesis of the bikunin proteins. The bikunin proteins are serine proteinase inhibitors found in high concentrations in human plasma. The proteins are composed of two or three polypeptide chains assembled by a newly identified carbohydrate mediated covalent inter-chain "Protein-Glycosaminoglycan-Protein" (PGP) cross-link (Enghild, J. J., Salvesen, G., Hefta, S. A., Thøgersen, I. B., Rutherfurd, S., and Pizzo, S. V. (1991) J. Biol. Chem. 266, 747-751). In this study we show that transformed hepatocyte cell lines, exemplified by HepG2 cells, have lost the ability to produce these proteins. In contrast, primary human hepatocytes produce bikunin proteins identical to the proteins identified in human plasma. Pulse-chase analysis demonstrate that the PGP-mediated cross-linking of the polypeptide chains occurs late in the secretary pathway. Moreover, the mechanism responsible for the formation of the PGP cross-link is divided in two steps involving a proteolytic cleavage followed by carbohydrate attachment. The results indicate that normal hepatocytes contain the biosynthetic machinery required for correct synthesis and processing. However, transformed cell lines are defective in several aspects of bikunin biosynthesis precluding such systems from being used as relevant in vitro models.