A carboxypeptidase B-like enzyme was detected in the soluble fraction of purified insulin secretory granules, and implicated in insulin biosynthesis. To investigate the role of this activity further, we purified the enzyme from rat insulinoma tissue by gel-filtration chromatography and affinity elution from p-aminobenzoyl-arginine. A yield of 42%, with a purification factor of 674 over the homogenate, was achieved. Analysis of the purified carboxypeptidase by SDS/polyacrylamide-gel electrophoresis under either reducing or non-reducing conditions showed it to be a monomeric protein of apparent Mr 55,000. The preparation was also homogeneous by high-performance gel-filtration chromatography. The enzyme bound to concanavalin A, showing it to be a glycoprotein. Amino acid analysis or chemical deglycosylation and SDS/polyacrylamide-gel electrophoresis indicated a protein Mr of 50,000, suggesting a carbohydrate content of approx. 9% by weight. The purified enzyme was able to remove basic amino acids from the C-terminus of proinsulin tryptic peptides to generate insulin, but did not further degrade the mature hormone. It was inhibited by EDTA, 1,10-phenanthroline and guanidinoethylmercaptosuccinic acid, and stimulated 5-fold by CoCl2. The pH optimum of the conversion of diarginyl-insulin into insulin was in the range 5-6, with little activity above pH 6.5. Activity was also expressed towards a dansylated tripeptide substrate (dansyl-phenylalanyl-leucyl-arginine; Km = 17.5 microM), and had a pH optimum of 5.5. These properties are indistinguishable from those of the activity located in secretory granules, and are compatible with the intragranular environment. The insulin-secretory-granule carboxypeptidase shared several properties of carboxypeptidase H from bovine adrenal medulla and pituitary. We propose that the carboxypeptidase that we purified is the pancreatic isoenzyme of carboxypeptidase H (crino carboxypeptidase B; EC 3.4.17.10), and is involved in the biosynthesis of insulin in the pancreatic beta-cell.