Many small peptide hormones are synthesized as larger precursors in which the mature hormone sequence is flanked by pairs of basic amino acids. These precursors often undergo extensive post-translational modifications; a critical step in this process is proteolytic excision of the hormone at the paired basic residues. To determine the role of paired basic amino acids as recognition signals for cleavage by processing enzymes, we investigated the heterologous expression of prosomatostatin (the pro-somatotropin release inhibiting factor (pro-SRIF). Pro-SRIF is one of the simplest peptide hormone precursors, possessing a single copy of the 14-residue SRIF peptide at its carboxyl terminus preceded by the least common pair of basic amino acids, Arg-Lys. Employing site-directed mutagenesis, we altered the paired basic cleavage site to the more common Arg-Arg and Lys-Arg residues. The native and mutated precursors were expressed in rat pituitary GH3 cells and mouse 3T3 cells using a retroviral vector. Alteration of the paired basic residues had no effect on the specificity of proteolytic cleavage as both the native and mutant precursors were processed with 70 to 80% efficiency in GH3 cells. Surprisingly, when the mutant pro-SRIFs were expressed in 3T3 cells, which do not process the native precursor, the Arg-Arg and Lys-Arg precursors were processed with 16 and 20% efficiency, respectively. The role of an acidic compartment in mediating pro-SRIF cleavage was also investigated using low concentrations of the lysosomotrophic drug Chloroquine. Twenty-five microM Chlorquine completely inhibited pro-SRIF cleavage and intracellular storage; the unprocessed precursor was secreted into the medium. We conclude that (i) exposure to an acidic compartment is required for pro-SRIF maturation, and (ii) the conformation of the processing site, rather than the composition of the basic amino acids, defines cleavage specificity by prohormone processing enzymes.