To yield biologically active homones, prohomones are processed by cleavages at paired basic amino acid residues. In this study we report that a chymotrypsin-like activity has been colocalized with trypsin-like and carboxypeptidase-B-like proteases in neurosecretory granules, the site of intracelular processing of prohomones. Using a peptide of 11 amino acids as a simple model system for the study of prohomone processing, we have identified in neurosecretory granule membranes a novel protease that specifically recognizes and cleaves peptide bonds at aromatic residues. Studies were also performed with the fluorogenic peptide substrate N-succinyl-leucyl-leucyl-valyl-tyrosine-7-amino-4-methyl-coumarine. The identified protease activity is inactivated by a cloromethyl ketone derivative (Tos-Phe-CH2-Cl), by Trasylol, and markedly by phenylmethylsulfonylfluoride and diisopropylfluorophosphate. This activity is colocalized with other prohomone-processing enzymes in neurosecretory granules, which indicates that this activity is involved in the prohomone processing. Alternatively, this activity may function in the degradation of homones and neuropeptides when they are released in synapses.