Vitellin polypeptides are proteolytically processed in ovarian follicles and embryos of the stick insect Carausius morosus. Data show that vitellin polypeptide A(3) of 54kDa is processed to yield polypeptide A(3)(*) of about 48kDa upon completion of ovarian development, whereas vitellin polypeptide A(2) of 90kDa yields polypeptide E(9) during embryonic development. As vitellin polypeptides are processed, polypeptides A(3)(*) and E(9) are transferred from the yolk granules to the cytosolic space of the vitellophages and start to express a ubiquitin reactivity. At the confocal microscope, anti-ubiquitin antibodies label specifically numerous small yolk granules and the cytosolic space of vitellophages. During embryonic development, ubiquitin carrying granules undergo acidification in much the same way as larger yolk granules. However, only these latter organelles are capable of converting a latent cysteine pro-protease into an active yolk protease upon acidification of their luminal space. These data are interpreted as indicating that ubiquitin-like polypeptides are restricted to small granules throughout ovarian and embryonic development, and that vitellin cleavage products are ubiquitinated following acidification of large yolk granules and transfer to the cytosolic space of the vitellophages.