Tumour necrosis factor (TNF) is synthesized initially as a membrane-bound precursor which is then cleaved to yield soluble, mature protein. The 26,000 MW TNF precursor isolated from the lysate of activated RAW 264.7 (mouse macrophage) cells by immunoprecipitation was used to identify pro-TNF cleavage enzyme in the same cells. A significant amount of mature protein was formed in samples containing Nonidet P-40 (NP-40)-lysed cells, whereas sonicated cells showed negligible activity. Most of the cleavage activity in macrophages was localized in the membrane/particulate fraction and remained largely insoluble after sonication or treatment with 2 mM EDTA/1 M NaCl, indicating that the enzyme is associated with the membrane/particulate fraction. The crude cleavage activity in membrane/particulate was partially inhibited by a spectrum of serine, cysteine and aspartate proteinase inhibitors, whereas secretion of TNF from activated macrophages was inhibited exclusively by serine and serine/cysteine proteinase inhibitors. This result suggested that, among heterogenous pro-TNF cleavage activities, the enzyme responsible for the processing of TNF is a serine proteinase. Pro-TNF cleavage activity was present in non-stimulated macrophages and decreased significantly 8 hr after lipopolysaccharide (LPS) stimulation, suggesting that it is negatively regulated after an initial burst of TNF synthesis.