Secretogranin III (SgIII) is an acidic protein of unknown function that is present in the storage vesicles of many neuroendocrine cells. It is coexpressed with the prohormone proopiomelanocortin in the intermediate pituitary of Xenopus laevis. We developed an antiserum to investigate the biosynthesis of SgIII in pulse-chase incubated Xenopus neurointermediate lobes. SgIII was synthesized as a 61- or 63-kDa (N-glycosylated) protein and processed to a 48-kDa form which, in turn, was partially cleaved to fragments of 28 and 20 kDa. The 48-, 28-, and 20-kDa cleavage products, but not their precursors, were secreted. This secretion is regulated and can be blocked in parallel with that of proopiomelanocortin-derived peptides by the hypothalamic factors dopamine, gamma-aminobutyric acid, and neuropeptide Y. Coexpression of Xenopus SgIII with prohormone convertase (PC)1 or PC2 in transfected fibroblasts was sufficient to reconstitute the processing events observed in the neurointermediate lobes. Site-directed mutagenesis revealed that Xenopus SgIII is cleaved at two dibasic sites, namely Lys68-Arg69 and Arg237-Arg238. Pulse-chase incubations of lobes with Na2[35S]SO4 showed that SgIII is sulfated in the trans-Golgi network before it is processed. Finally, SgIII processing was found in several neuroendocrine cell types from various species. We conclude that SgIII is a precursor protein and that the intact molecule can only have an intracellular function, whereas an extracellular role can only be attributed to its cleavage products.