Surfactant protein B is a 79 amino acid hydrophobic protein derived from a 381 amino acid precursor by a series of enzymatic cleavages of the N- and C-terminal propeptides. Complete processing of SP-B is type 2 cell specific and linked temporally to the appearance of lamellar bodies in the developing alveolar epithelium. The subcellular localization of SP-B processing is not well understood but extends from endoplasmic reticulum to lamellar body. We used cultured (5d) second trimester human fetal lung tissue as a model of differentiated type 2 cells to clarify the subcellular localization of events in SP-B processing. We pulse:chase labelled lung explants (n=4) with35 S-met/cys (200 μCi/ml) in the presence and absence of brefeldin A(10-20 μg/ml) which disrupts Golgi stacks, preventing protein modifications distal to the medial Golgi. Immunoprecipitation of labelled proteins using a polyclonal antibody to 8kD human SP-B showed that newly synthesized 40kD preproSP-B was modified to 42kD proSP-B, but N-terminal propeptide cleavage was nearly completely and reversibly inhibited by brefeldin A over 8h of chase in both the presence and absence of 10 nM dexamethasone. To further localize SP-B cleavage events, we used epitope-specific antisera to regions within the N- and C-terminal propeptides as well as fluorescein-conjugated conconavalin A(ConA), a lectin that binds to elements within the endoplasmic reticulum. Immunofluorescence microscopy colocalized ConA staining with fluorescence from Texas red-conjugated secondary antibody used with NFPROX antiserum against Ser145-Leu160 of the N-terminal propeptide. ConA did not colocalize with CFLANK (Gly284-Ser304), NFLANK(Gln186-Gln200) or mature human SP-B antisera. We conclude that glycosylation and signal peptide cleavage resulting in 42kD proSP-B occur proximal to the medial Golgi and subsequent N- and C-terminal propeptide cleavages occur within or distal to the transGolgi.