Biosynthesis, enzymatic processing, and immunocytochemical localization of an abundant developmentally regulated cysteine proteinase of Leishmania pifanoi, Lpcys2, were investigated employing axenic cultured amastigotes and monoclonal antibodies specifically recognizing either the mature proteinase or the carboxy-terminal extension domain. Pulse labeling and protein sequence data indicated that a 45-kDa precursor is processed to a 40-kDa intermediate, which is further cleaved to generate the 27-kDa mature enzyme and a 15-kDa COOH-terminal domain. Evidence indicates that proteolytic activity is associated with the intermediate form as well as the mature proteinase. Treatment with selected cysteine but not aspartic acid proteinase inhibitors arrested proteolytic processing of Lpcys2 in vivo and inhibited parasite cell division. Electron microscopic immunolocalization of both catalytic and COOH-terminal domains in L. pifanoi and Leishmania amazonensis amastigotes showed intense labeling of megasomes, indicating that cleavage of the COOH-terminal domain probably occurs in the megasome. A low level of the mature proteinase was also associated with the flagellar pocket and plasma membrane; consistent with this observation, low level secretion of Lpcys2 into the culture medium was detected. Lpcys1, a related, less abundant amastigote-specific cysteine proteinase lacking a comparable COOH-terminal domain, was localized to the flagellar pocket and megasomes. Consequently, enzyme sorting to megasomes does not appear to depend upon the COOH-terminal domain; hence this region of Lpcys2 may not be essential for its intracellular targeting.