The Kex2 protein of the yeast Saccharomyces cerevisiae is a membrane-bound, Ca2(+)-dependent serine protease that cleaves the precursors of the mating pheromone alpha-factor and the M1 killer toxin at pairs of basic residues during their transport through the secretory pathway. To begin to characterize the intracellular locus of Kex2-dependent proteolytic processing, we have examined the subcellular distribution of Kex2 protein in yeast by indirect immunofluorescence. Kex2 protein is located at multiple, discrete sites within wild-type yeast cells (average, 3.0 +/- 1.7/mother cell). Qualitatively similar fluorescence patterns are observed at elevated levels of expression, but no signal is found in cells lacking the KEX2 gene. Structures containing Kex2 protein are not concentrated at a perinuclear location, but are distributed throughout the cytoplasm at all phases of the cell cycle. Kex2-containing structures appear in the bud at an early, premitotic stage. Analysis of conditional secretory (sec) mutants demonstrates that Kex2 protein ordinarily progresses from the ER to the Golgi but is not incorporated into secretory vesicles, consistent with the proposed localization of Kex2 protein to the yeast Golgi complex.