The two processing sites in the conversion of preproalbumin to albumin are marked by arginine residues. Therefore, to study the mechanisms of albumin processing and secretion, the arginine residues of nascent albumin were replaced with canavanine by the incubation of Hep-G2 cells with this arginine analog. During a 4-h interval, canavanine inhibited (67%) the secretion of nascent albumin and increased the intracellular transit time of albumin secretion from 24 to 39 min. At 1 h, canavanine inhibited total protein synthesis by 19% and albumin synthesis by about 40%. Both the intracellular and secreted albumin produced by canavanine-treated cells were analyzed by DEAE-cellulose chromatography and were found to be more acidic than normal proalbumin and albumin. Further analysis on sodium dodecyl sulfate polyacrylamide gel electrophoresis indicated that the albumin produced and secreted by canavanine-treated cells appeared to have a larger molecular weight (by 4000) than serum albumin. The canavanine-treated cells were incubated with L-[3H]leucine and L-[3H]phenylalanine and the location of radioactive L-leucine and L-phenylalanine in the 30 NH2-terminal amino acid residues of secreted albumin was determined. The results indicated that canavanine-treated cells secreted proalbumin (79%) and also some fully processed albumin (21%). Preproalbumin was not secreted. Untreated Hep-G2 cells mostly secreted fully processed serum albumin (93%) with only traces of proalbumin (7%).