The subcellular localization of rat neutrophil cathepsin E was examined by a modification of the method of N. Borregaard et al. [(1983) J. Cell Biol. 97, 52-61]. When the postnuclear cavitate of rat neutrophils was subjected to density centrifugation on discontinuous Percoll gradients, three particulate bands, P1 (lowest; azurophil granule rich), P2 (middle; specific granule rich), and P3 (highest; plasma membrane rich), were segregated. A combined application of immunochemical and electrophoretic methods revealed a striking difference in subcellular localization between cathepsin E and cathepsin D: Cathepsin E was associated with P3 and soluble fractions, and cathepsin D was chiefly associated with P1 and P2 fractions. The results thus indicate that cathepsin E is a nonlysosomal acid proteinase in rat neutrophils. It was found that cathepsin E existed in two enzymatically active molecular forms, referred to as CE-I and CE-II, in rat neutrophil extracts. To examine the relationships between the two forms, cathepsin E was purified to homogeneity from rat gastric mucosae. The purified enzyme exhibited a single protein band of 43 kDa on sodium dodecyl sulfate (SDS)-polyacrylamide gel electrophoresis, but electrophoresis without SDS, followed by visualization of activity in the gel, revealed two activity bands corresponding to CE-II and CE-I in neutrophil extracts. Pretreatment of the enzyme with beta-mercaptoethanol or dithiothreitol resulted in an increase in CE-I activity with a concomitant decrease in CE-II activity on gels. Upon gel filtration, the molecular weights of CE-II and CE-I were estimated to be 98,000 and 51,000, respectively, strongly suggesting that they are the dimeric and monomeric forms of the cathepsin E subunit.