To induce exocellular proteolytic enzyme from carbon-starved exponential-phase cells of Neurospora crassa, both a protein substrate and an activating protease of certain specific properties must be present at the same time. The cells must be capable of protein synthesis, since cycloheximide inhibits the process, but cell growth, as determined by increase in cell mass, does not appear to be required. Both soluble (bovine serum albumin, myoglobin) and insoluble protein substrates (collagen, corn zein) will affect protease induction, although certain soluble, globular proteins (egg white globulin, bovine gamma globulin) will not. In most cases, rates of protease induction are proportional to protein concentration, regardless of the nature of the inducing protein. All activating proteases capable of affecting induction in a manner similar to that of N. crassa exocellular protease were of bacterial origin and were exoproteases. Mammalian proteases and peptidases had little or no effect on the induction process.