The conversion of synthetic somatostatin-28 (S-28) to somatostatin-14 (S-14, SRIF) by subcellular fractions of rat hypothalamus has been investigated. The conversion products were identified by two techniques: (1) two separate RIAs using antibodies directed toward the central (RIA R149) or the N-terminal (RIA S39) region of the S-14 molecule, (2) gel chromatography of the reaction mixture followed by analysis of the column fractions by RIA R149. Maximal S-28 to S-14 converting activity was observed with the particulate fraction of the lysed synaptosomal pellet sedimenting at the density interface 8-16% Ficoll in 0.32 M sucrose in a discontinuous sucrose/Ficoll gradient. Concomitant with conversion, degradation of total somatostatin-like immunoreactivity (SLI) was also observed with this fraction (t1/2 approximately 24 min). Relatively little converting activity was found in the remaining subcellular fractions. These data suggest that hypothalamic synaptosomes contain membrane bound enzymes which are able to catalyze the conversion of S-28 to S-14. Tissue specific differences in this converting activity may account for the reported variability in the S-28:S-14 ratios in different tissues.