We have isolated protransglutaminase E, the zymogen form of epidermal transglutaminase E, from the skin of the adult guinea pig. This zymogen is the source of the large majority of soluble transglutaminase activity of skin. A molecular weight value for protransglutaminase E of 77,800 +/- 700, estimated by sedimentation equilibrium, is in close agreement with the apparent values determined by exclusion chromatography and by sodium dodecyl sulfate-polyacrylamide gel electrophoresis. Treatment of the proenzyme with dispase, proteinase K, trypsin, or thrombin produces active enzyme. The enzyme, transglutaminase E, formed by the action of dispase, was observed to exist in the native state as a molecule indistinguishable in size from the zymogen. Under denaturing conditions, however, the enzyme dissociates into two fragments with molecular weights of 50,000 and 27,000. The observation that reducing agents are not needed for this dissociation suggests a noncovalent association of the two peptide chains in the native enzyme. Evidence that the catalytically essential -SH group of the enzyme residues in the Mr 50,000 fragment and that only the Mr 27,000 fragment possesses an unmasked amino terminus provides the basis for a proposed model of zymogen activation. Whether the noncatalytic fragment plays a role in catalysis is not known because separation of the fragments of native enzyme was not achieved.