Proteolytic processing of somatostatin precursor produces several peptides including somatostatin-14 (S-14), somatostatin-28 (S-28), and somatostatin-28 (1-12) (S-28(1-12)). The subcellular sites at which these cleavages occur were identified by quantitative evaluation of these products in enriched fractions of the biosynthetic secretory apparatus of rat cortical or hypothalamic cells. Each of the major cellular compartments was obtained by discontinuous gradient centrifugation and was characterized both by specific enzyme markers and electron microscopy. The prosomatostatin-derived fragments were measured by radioimmunoassay after chromatographic separation. Two specific antibodies were used, allowing the identification of either S-28(1-12) or S-14 which results from peptide bond hydrolysis at a monobasic (arginine) and a dibasic (Arg-Lys) cleavage site, respectively. These antibodies also revealed prosomatostatin-derived forms containing at their COOH terminus the corresponding dodeca- and tetradecapeptide sequences. Whereas the reticulum-enriched fractions contained the highest levels of prosomatostatin, the proportion of precursor was significantly lower in the Golgi apparatus. In the latter fraction, other processed forms were also present, i.e. S-14 and S-28(1-12) together with the NH2-terminal domain (1-76) of prosomatostatin (pro-S(1-76). Inhibition of the intracellular transport either by monensin or by preincubation at reduced temperature resulted in an increase of prosomatostatin-derived peptides in the Golgi-enriched fractions. Finally, immunogold labeling using antibodies raised against S-28(1-12) and S-14 epitopes revealed the presence of these forms almost exclusively in the Golgi-enriched fraction mainly at the surface of saccules and vesicles. Together these data demonstrate that in rat neural cells, prosomatostatin proteolytic processing at both monobasic and dibasic sites is initiated at the level of the Golgi apparatus.