Proteolytic cleavage (nicking) of diphtheria toxin (DT) in the 14-amino acid loop subtended by the disulfide bond between Cys186 and Cys201 is required for the cytotoxic action of DT. The loop includes the consensus motif for cleavage by a membrane-anchored protease, furin. We found that a soluble form of furin cleaves intact DT between Arg103 and Ser194 in vitro. LoVo cells, a human colon carcinoma cell line, do not produce functional furin. We show here that intact DT is not cleaved by LoVo cells. The cells are resistant to intact DT, although they are sensitive to DT nicked by furin before it is added to the medium. When intact DT is added to LoVo/Fur1 cells, a stable transfectant of LoVo cells expressing mouse furin, nicked DT associated with the cells is observed. LoVo/Fur1 cells are sensitive to both intact and nicked DT. These results indicate that furin is involved in the toxicity of intact DT. Bafilomycin A1, an inhibitor of intracellular vesicle acidification, did not inhibit cleavage of intact DT by LoVo/Fur1 or Vero cells, indicating that cleavage can proceed in a neutral environment. Inhibitors of endocytosis decreased DT cleavage but did not eliminate it. We also found a small amount of nicked DT in the culture medium. These results may indicate that intact DT is cleaved age by cell-associated furin on the cell surface as well as in endocytotic vesicles.