Pro-opiomelanocortin (adrenocorticotropin/endorphin prohormone) is processed to yield active hormones by cleavages at paired basic amino acid residues. In this study, an enzyme that specifically cleaves at the paired basic residues of this prohormone has been purified from bovine pituitary intermediate lobe secretory vesicles, the intracellular processing site of proopiomelanocortin. This enzyme, named pro-opiomelanocortin converting enzyme, has been characterized as a glycoprotein of Mr approximately 70,000. It has an apparent isoelectric point between 3.5 and 4.0. The pH optimum of the pro-opiomelanocortin converting enzyme is between 4 and 5, but the enzyme is highly active at the intravesicular pH of 5.1-5.6. The enzyme specifically cleaved the Lys-Arg pairs of pro-opiomelanocortin to yield Mr = to 21,000-23,000 ACTH, beta-lipotropin, Mr 13,000 and 4,500 ACTH, beta-endorphin, and a Mr = 16,000 NH2-terminal glycopeptide, the products synthesized by the pituitary intermediate lobe in situ. NH2- and COOH-terminal analysis of the products indicated that the pro-opiomelanocortin converting enzyme cleaves the peptide bond either between the Lys and Arg or on the carboxyl side of the Arg at Lys-Arg pairs of pro-opiomelanocortin. The intracellular localization, pH optimum, and cleavage specificity of the enzyme suggest that it may function as a pro-opiomelanocortin processing enzyme in the pituitary intermediate lobe in vivo.