Thylakoidal processing peptidase (TPP) catalyzes the removal of signal peptide which leads to maturation of a subset of proteins including photosynthetic electron transport components in thylakoids. The biochemical properties of TPP were highly defined during the 1980's and 1990's, but the physiological significance of the TPP activity had remained undefined. Completion of genome sequencing revealed the presence of three TPP isoforms in the model plant Arabidopsis thaliana. A recent genetic study demonstrated that one isoform, plastidic type I signal peptidase 1 (Plsp1), is necessary for proper thylakoid assembly. Interestingly, Plsp1 was found in both the chloroplast envelope and thylakoids, being responsible for maturation of an outer membrane protein Toc75 and a lumenal protein OE33. A more recent study has shown that Plsp1 is involved in maturation of two additional lumenal proteins, OE23 and plastocyanin, and that accumulation of unprocessed Toc75 does not disrupt normal chloroplast development. The study also revealed that plsp1-null plastids accumulate balloon-like vesicles that appear to be the remnants of thylakoids as they contain unprocessed OE33 in the peripheral regions. These findings suggest that proper maturation of lumenal proteins is required for correct assembly and/or maintenance of thylakoids, but may not be necessary for initiation of membrane development. The ballooned thylakoids in plsp1-null plastids may be a useful tool to elucidate the mechanism of thylakoid flattening, which correlates with the energized state of the membranes.