The Aspergillus nidulans transcription factor PacC, which mediates pH regulation, is proteolytically processed to a functional form in response to ambient alkaline pH. The full-length PacC form is unstable in the presence of an operational pH signal transduction pathway, due to processing to the relatively stable short functional form. We have characterized and used an extensive collection of pacC mutations, including a novel class of "neutrality-mimicking" pacC mutations having aspects of both acidity- and alkalinity-mimicking phenotypes, to investigate a number of important features of PacC processing. Analysis of mutant proteins lacking the major translation initiation residue or truncated at various distances from the C terminus showed that PacC processing does not remove N-terminal residues, indicated that processing yields slightly heterogeneous products, and delimited the most upstream processing site to residues approximately 252 to 254. Faithful processing of three mutant proteins having deletions of a region including the predicted processing site(s) and of a fourth having 55 frameshifted residues following residue 238 indicated that specificity determinants reside at sequences or structural features located upstream of residue 235. Thus, the PacC protease cuts a peptide bond(s) remote from these determinants, possibly thereby resembling type I endonucleases. Downstream of the cleavage site, residues 407 to 678 are not essential for processing, but truncation at or before residue 333 largely prevents it. Ambient pH apparently regulates the accessibility of PacC to proteolytic processing. Alkalinity-mimicking mutations L259R, L266F, and L340S favor the protease-accessible conformation, whereas a protein with residues 465 to 540 deleted retains a protease-inaccessible conformation, leading to acidity mimicry. Finally, not only does processing constitute a crucial form of modulation for PacC, but there is evidence for its conservation during fungal evolution. Transgenic expression of a truncated PacC protein, which was processed in a pH-independent manner, showed that appropriate processing can occur in Saccharomyces cerevisiae.