We have investigated the roles of full-length and carboxyl-terminus-truncated forms of the subtilisin-like prohormone convertase SPC3 in the processing of the radiolabeled vasopressin and oxytocin precursors, in vitro. We found SPC3 cleaves provasopressin at both the vasopressin-neurophysin and neurophysin-glycopeptide processing sites. Prooxytocin is cleaved by SPC3 at the oxytocin-neurophysin cleavage site. However, our results reveal differences in processing of provasopressin by the different molecular forms of SPC3. In incubations where the rate of autocatalytic carboxyl-terminus truncation of SPC3 was dramatically reduced, 86-kDa SPC3, which has an unprocessed carboxyl terminus, cleaved provasopressin at the neurophysin-glycopeptide junction. Cleavage at the vasopressin-neurophysin junction only occurred with the appearance of carboxyl-terminus-truncated forms of the enzyme. Incubations containing 64-kDa SPC3 or 64-kDa SPC3-T, a recombinant form of SPC3 truncated 14 amino acids beyond the conserved carboxyl-terminal "P-domain," rapidly cleaved provasopressin at both the vasopressin-neurophysin and neurophysin-glycopeptide junctions. Our results also suggest that prooxytocin is unable to be cleaved by the 86-kDa form of SPC3. We propose that SPC3 should be considered as a candidate endoprotease in the biosynthesis of vasopressin. Furthermore, we suggest that the carboxyl terminus of SPC3 alters the cleavage specificity of SPC3.