Prosaposin is a multifunctional protein encoded at a single locus in humans and mice. The precursor contains, in tandem, four glycoprotein activators or saposins, termed A, B, C, and D, that are essential for specific glycosphingolipid hydrolase activities. Prosaposin appears to be a potent neurotrophic factor. To explore the proteolytic processing from prosaposin to mature activator proteins, metabolic labeling was done with human prosaposin expressed in insect cells, human fibroblasts, neuronal stem cells (NT2) and retinoic acid-differentiated NT2 neurons. In all cell types, the major processing pathway was through a tetrasaposin, A-B-C-D, from which saposin A was then removed. In mammalian cells monosaposins were derived from the trisaposin B-C-D by cleavage to the disaposins, B-C and C-D, that were processed to monosaposins. In insect cells the major end products were the disaposins, with A-B and C-D derived from the tetrasaposin, A-B-C-D, or with B-C and C-D derived from the trisaposin, B-C-D. In insect and mammalian cells, the nonsignal NH2-terminal peptide preceding saposin A (termed Nter) was usually removed prior to saposin A cleavage. In NT2-derived differentiated neurons, precursor tetrasaposins containing A-B-C-D were secreted with and without Nter. Immunofluorescence studies using prosaposin-specific antisera showed large steady state amounts of uncleaved prosaposin in Purkinje cells, cortical neurons, and other specific cell types in adult mice. These studies indicate that prosaposin processing is highly regulated at a proteolytic level to produce prosaposin, tetrasaposins, or mature monosaposins in specific mammalian cells.