The Kex2 protease of the yeast Saccharomyces cerevisiae is a prototypical eukaryotic prohormone-processing enzyme that cleaves precursors of secreted peptides at pairs of basic residues. Here we have established the pathway of posttranslational modification of Kex2 protein using immunoprecipitation of the biosynthetically pulse-labeled protein from a variety of wild-type and mutant yeast strains as the principal methodology. Kex2 protein is initially synthesized as a prepro-enzyme that undergoes cotranslational signal peptide cleavage and addition of Asn-linked core oligosaccharide and Ser/Thr-linked mannose in the ER. The earliest detectable species, I1 (approximately 129 kD), undergoes rapid amino-terminal proteolytic removal of a approximately 9-kD pro-segment yielding species I2 (approximately 120 kD) before arrival at the Golgi complex. Transport to the Golgi complex is marked by extensive elaboration of Ser/Thr-linked chains and minor modification of Asn-linked oligosaccharide. During the latter phase of its lifetime, Kex2 protein undergoes a gradual increase in apparent molecular weight. This final modification serves as a marker for association of Kex2 protease with a late compartment of the yeast Golgi complex in which it is concentrated about 27-fold relative to other secretory proteins.