We have assigned the biosynthetic processing steps of cathepsin D to intracellular compartments which are involved in its transport to lysosomes in HepG2 cells. Cathepsin D was synthesized as a 51-kDa proenzyme. After formation of 51-55-kDa intermediates due to processing of N-linked oligosaccharides, procathepsin D was proteolytically processed to an intermediate 44-kDa and the mature 31-kDa enzyme. The intersection of the biosynthetic pathway of cathepsin D with the endocytic pathway was labeled with horseradish peroxidase and monitored biochemically by 3,3'-diaminobenzidine cytochemistry. Horseradish peroxidase was used either as a fluid-phase marker to label the entire endocytic pathway or conjugated to transferrin (Tf) to label endosomes only. Directly after biosynthesis cathepsin D was accessible neither to horseradish peroxidase nor Tf-horseradish peroxidase. Newly synthesized 51-55-kDa species of cathepsin D present in the trans-Golgi reticulum were accessible to both horseradish peroxidase and Tf-horseradish peroxidase. The accessibility of trans-Golgi reticulum to both endocytosed horseradish peroxidase and Tf-horseradish peroxidase was monitored by colocalization with a secretory protein, alpha 1anti-trypsin. The proteolytic processing of 51-55-kDa to 44-kDa cathepsin D occurred in compartments which were fully accessible to fluid-phase horseradish peroxidase. Tf-horseradish peroxidase had access to only 20% of 44-kDa cathepsin D while it had no access to 31-kDa cathepsin D. In contrast, the 31-kDa species was completely accessible to fluid-phase horseradish peroxidase. We conclude that proteolytic processing of 51-55-kDa to 44-kDa cathepsin D occurs in endosomes, whereas the processing of 44-31-kDa cathepsin D takes place in lysosomes.