Multiple biologically active peptides arising from a common prohormone are sorted into distinct classes of dense core vesicles within the bag cell neurons of Aplysia californica. In this study, pulse-chase analysis, combined with subcellular fractionation on Percoll gradients, are used to define the location of the prohormone processing events within the secretory pathway. Initial cleavage of the prohormone occurs in a light cellular compartment associated with the Golgi apparatus. The amino-terminal processing intermediate then accumulates in a denser compartment containing small dense cores enclosed in membranous sacs, as well as larger immature vesicles. After 4 h, amino-terminal products are found primarily in a much denser compartment which consists of large and small dense core vesicles. These large and small vesicles can be separated from each other using Percoll gradient centrifugation and are found to be enriched in amino- and carboxy-terminal products, respectively. Lastly, membrane association experiments suggest differential binding to membranes, or integral membrane proteins, as a possible mechanism for sorting of amino- and carboxy-terminal products.