K28 killer strains of Saccharomyces cerevisiae are permanently infected with a cytoplasmic persisting dsRNA virus encoding a secreted alpha/beta heterodimeric protein toxin that kills sensitive cells by cell-cycle arrest and inhibition of DNA synthesis. In vivo processing of the 345 aa toxin precursor (preprotoxin; pptox) involves multiple internal and carboxy-terminal cleavage events by the prohormone convertases Kex2p and Kex1p. By site-directed mutagenesis of the preprotoxin gene and phenotypic analysis of its in vivo effects it is now demonstrated that secretion of a biological active virus toxin requires signal peptidase cleavage after Gly(36) and Kex2p-mediated processing at the alpha subunit N terminus (after Glu-Arg(49)), the alpha subunit C terminus (after Ser-Arg(149)) and at the beta subunit N terminus (after Lys-Arg(245)). The mature C terminus of the beta subunit is trimmed by Kex1p, which removes the terminal Arg(345) residue, thus uncovering the toxin's endoplasmic reticulum targeting signal (HDEL) which--in a sensitive target cell--is essential for retrograde toxin transport. Interestingly, both toxin subunits are covalently linked by a single disulfide bond between alpha-Cys(56) and beta-Cys(340), and expression of a mutant toxin in which beta-Cys(340) had been replaced by Ser(340) resulted in the secretion of a non-toxic alpha/beta heterodimer that is blocked in retrograde transport and incapable of entering the yeast cell cytosol, indicating that one important in vivo function of beta-Cys(340) might be to ensure accessibility of the toxin's beta subunit C terminus to the HDEL receptor of the target cell.