To study the roles of the catalytic activity, propeptide, and N-glycosylation of the intracellular aspartic proteinase cathepsin E in biosynthesis, processing, and intracellular trafficking, we constructed various rat cathepsin E mutants in which active-site Asp residues were changed to Ala or which lacked propeptides and N-glycosylation. Wild-type cathepsin E expressed in human embryonic kidney 293T cells was mainly found in the LAMP-1-positive endosomal organelles, as determined by immunofluorescence microscopy. Consistently, pulse-chase analysis revealed that the initially synthesized pro-cathepsin E was processed to the mature enzyme within a 24 h chase. This process was completely inhibited by brefeldin A and bafilomycin A, indicating its transport from the endoplasmic reticulum (ER) to the endosomal acidic compartment. Mutants with Asp residues in the two active-site consensus motifs changed to Ala and lacking the propeptide (Leu23-Phe58) and the putative ER-retention sequence (Ser59-Asp98) were neither processed nor transported to the endosomal compartment. The mutant lacking the ER-retention sequence was rapidly degraded in the ER, indicating the importance of this sequence in correct folding. The single (N92Q or N324D) and double (N92Q/N324D) N-glycosylation-deficient mutants were neither processed into a mature form nor transported to the endosomal compartment, but were stably retained in the ER without degradation. These data indicate that the catalytic activity, propeptides, and N-glycosylation of this protein are all essential for its processing, maturation, and trafficking.