There are seven known subtilisin/kexin-like proprotein convertases responsible for the processing of numerous precursors at either pairs or specific single basic residues. Three members, PACE4, PC4 and PC5, exhibit alternative splicing of their RNAs resulting in the generation of multiple isoforms differing in their C- or N-terminal segments. In this study we examined the biosynthesis, functional activity and cellular localization of two of these isoforms, namely the full length PACE4-A and the C-terminally truncated PACE4-C which lacks 11 amino acids at the end of its chaperone-like P-domain. We report the existence of a new isoform, termed PACE4-CS, which is a C-terminally shortened version of PACE4-C. Cellular expression results demonstrated that PACE4-A codes for a functional secretable enzyme capable of cleaving pro7B2 into 7B2. In contrast, PACE4-CS is not secreted since it remains in the endoplasmic reticulum as an inactive zymogen form, thereby emphasizing the importance of the integrity of the P-domain. Microsequencing of the intracellular PACE4-CS protein in two cell lines revealed that it is proPACE4-CS with an N-terminal trimming reminiscent of the action of a dipeptidylpeptidase recognizing the motifs X-Ala and X-Pro.