The somatostatins are neuropeptides of 14 and 28 amino acids that inhibit the release of growth hormone and other hypophyseal and gastrointestinal peptides. These neuropeptides are cleaved posttranslationally from a common precursor, pre-prosomatostatin. We report here the production and processing of pre-prosomatostatin by transgenic mice carrying a metallothionein-somatostatin fusion gene. The most active site of somatostatin production, as determined by hormone concentrations in the tissues, is the anterior pituitary, a tissue that does not normally synthesize somatostatin-like peptides. Anterior pituitary processed pre-prosomatostatin almost exclusively to the two biologically active peptides, somatostatin-14 and somatostatin-28, whereas the liver and kidney synthesized much smaller quantities of predominantly a 6000 dalton somatostatin-like peptide. The growth of the transgenic mice was normal despite high plasma levels of the somatostatin-like peptides. These studies indicate that proteases which cleave prosomatostatin to somatostatin-28 and somatostatin-14 are not specific to tissues that normally express somatostatin.