The type 1 killer phenotype in S. cerevisiae, mediated by secretion of an 11.5 kilodalton (kd) protein toxin, is cytoplasmically determined by the 1.9 kb M1-dsRNA plasmid. Maintenance of M1-dsRNA is dependent on the 4.5 kb L1-dsRNA because L1 encodes the capsid protein of the virus-like particles that separately encapsidate both dsRNA species. We have shown that in vitro translation of denatured M1-dsRNA produces M1-P1, a 32 kd protein containing the toxin peptides. We now demonstrate the presence of an unstable, 42 kd, membrane-associated, glycosylated protoxin in killer cells, probably derived from M1-P1 by cotranslational processing, and glycosylation. In vitro cotranslational processing of M1-P1, derived both from in vivo mRNAs and from denatured M1-dsRNA, produces a product resembling protoxin. Processing involves loss of 1.6 kd of protein, presumably an N-terminal leader peptide, and glycosylation. This information, together with data on in vitro expression of suppressive deletion mutants of M1-dsRNA, allows construction of testable models for the functional sequence of M1-P1 and for its maturation to toxin.