The prepro sequence of the yeast prepro-alpha-factor, usually referred to as the alpha-factor leader, has often been used for the efficient secretion of heterologous proteins from the yeast Saccharomyces cerevisiae. The alpha-factor leader consists of a 19-amino acid N-terminal pre or signal sequence followed by a 66-amino acid proregion. After removal of the signal sequence during membrane translocation, the proregion is cleaved from the precursor protein by the Kex2 endoprotease only in a late Golgi compartment. Here we report that a modified Kex2 enzyme, containing at the C-terminus the HDEL tetrapeptide, cleaves the proregion from the alpha-factor leader--human insulin like growth factor-1 fusion protein in the endoplasmic reticulum. The processing of pro-proteins earlier in the secretion pathway could be helpful in defining the cellular function of the proregions present naturally in various eucaryotic precursor proteins.