Proteolysis at neutral pH in the soluble fraction of cultured pig thyroid epithelial cells was examined using a synthetic calpain substrate, succinyl-Leu-Tyr-7-amino-4-methylcoumarin. The Ca2+-independent proteolytic activity was largely inhibited by substances known to affect cysteine- and metalloproteases, whereas no or little effects were obtained with inhibitors affecting serine- and aspartic proteases. Addition of Ca2+ did not significantly alter the rate of substrate degradation. Biochemical separation via hydrophobic interaction chromatography and Western blotting demonstrated the presence of both m-calpain (40% of total calpain) and mu-calpain (60%) in confluent thyrocytes. Determination of calpastatin activity indicated a 30 times higher level of the inhibitor as compared to total calpain activity. Western blotting showed the presence of a 110 kD calpastatin form with additional low mol wt forms possibly representing fragmentation products. In immunofluorescent stainings, m-calpain had a diffuse cytoplasmic distribution whereas mu-calpain was located both in the cytoplasm and at the cell-cell contacts. Calpastatin immunoreactivity was mainly granular and located close to the nucleus, although a fibrillar distribution was also observed. The results show the presence of all components of the calpain/calpastatin system and indicate a strict control of calpain activity in cultured thyrocytes. The different subcellular distributions of calpains and calpastatin suggests that they are compartmentalized and require mobilization to interact.