Our recent studies have shown that cathepsin L is first synthesized as an enzymatically inactive proform in endoplasmic reticulum and is successively converted into an active form during intracellular transport and we postulated that aspartic proteinases would be responsible for the intracellular propeptide-processing step of procathepsin L accompanied by the activation of enzyme (Y. Nishimura, T. Kawabata, and K. Kato (1988) Arch. Biochem. Biophys. 261, 64-71). To better understand this proposed mechanism, we investigated the effect of pepstatin, a potent inhibitor of aspartic proteinases, on the intracellular processing kinetics of cathepsin L analyzed by pulse-chase experiments in vivo with [35S]methionine in the primary cultures of rat hepatocytes. In the pepstatin-treated cells, the proteolytic conversion of cellular procathepsin L of 39 kDa to the mature enzyme was significantly inhibited and considerable amounts of proenzyme were found in the cell after 5-h chase periods. Further, the subcellular fractionation experiments demonstrated that the intracellular processing of procathepsin L in the high density lysosomal fraction was significantly inhibited and that considerable amounts of the procathepsin L form were still observed in the light density microsomal fraction after 2 h of chase. These results suggest that pepstatin treatment caused a significant inhibitory effect on the intracellular processing and also on the intracellular movement of procathepsin L from the endoplasmic reticulum to the lysosomes. These findings provide the first evidence showing that aspartic proteinase may play an important role in the intracellular proteolytic processing and activation of lysosomal cathepsin L in vivo. Therefore, we suggest that cathepsin D, a major lysosomal aspartic proteinase, is more likely to be involved in this proposed model in the lysosomes.