Cadherins are calcium-dependent glycoproteins that function as cell-cell adhesion molecules and are linked to the actin cytoskeleton via catenins. Newly synthesized cadherins contain a prosequence that must be proteolytically removed to generate a functional adhesion molecule. The goal of this study was to examine the proteolytic processing of N-cadherin and the assembly of the cadherin-catenin complex in cells that express endogenous N-cadherin. A monoclonal antibody specific for the proregion of human N-cadherin was generated and used to examine N-cadherin processing. Our data show that newly synthesized proN-cadherin is phosphorylated and proteolytically processed prior to transport to the plasma membrane. In addition, we show that beta-catenin and plakoglobin associate only with phosphorylated proN-cadherin, whereas p120(ctn) can associate with both phosphorylated and non-phosphorylated proN-cadherin. Immunoprecipitations using anti-proN-cadherin showed that cadherin-catenin complexes are assembled prior to localization at the plasma membrane. These data suggest that a core N-cadherin-catenin complex assembles in the endoplasmic reticulum or Golgi compartment and is transported to the plasma membrane where linkage to the actin cytoskeleton can be established.