The proprotein convertase PC5 is encoded by multiple mRNAs, two of which give rise to the COOH-terminal variant isoforms PC5-A (915 amino acids [aa]) and PC5-B (1877 aa). To investigate the differences in biosynthesis and sorting between these two proteins, we generated stably transfected AtT-20 cell lines expressing each enzyme individually and examined their respective processing pattern and subcellular localization. Biosynthetic analyses coupled to immunofluorescence studies demonstrated that the shorter and soluble PC5-A is sorted to regulated secretory granules. In contrast, the COOH- terminally extended and membrane-bound PC5-B is located in the Golgi. The presence of a sorting signal in the COOH-terminal 38 amino acids unique to PC5-A was demonstrated by the inefficient entry into the regulated secretory pathway of a mutant lacking this segment. EM of pancreatic cells established the presence of immunoreactive PC5 in glucagon-containing granules, demonstrating the sorting of this protein to dense core secretory granules in endocrine cells. Thus, a single PC5 gene generates COOH-terminally modified isoforms with different sorting signals directing these proteins to distinct subcellular localization, thereby allowing them to process their appropriate substrates.