Colligin is a collagen-binding glycoprotein localized to the endoplasmic reticulum (ER) and has been proposed to play a role in collagen biosynthesis. Its membership in the serpin family prompted us to examine its effect on procollagen degradation. We first showed that procollagen degradation can take place in the ER of L6 myoblasts by using brefeldin A to block transit from the ER. This degradation could be prevented by the serine protease inhibitors N-tosyl-L-lysine chloromethyl ketone (TLCK) and N-tosyl-L-phenylalanine chloromethyl ketone (TPCK). To examine procollagen degradation in vitro, isolated liver microsomes were incubated with procollagen. Intact microsomes were unable to degrade labeled procollagen I, fibronectin, or the cytoplasmic proteins, phosphorylase b and the RI subunit of the cAMP-dependent protein kinase. However, when the microsomes were permeabilized by treatment with detergent, they became capable of degrading procollagen and fibronectin, but not the cytoplasmic proteins. The degrading activity was not due to cross-contamination by lysosomal or cytoplasmic, multicatalytic proteases. The proteolysis of procollagen chains in the treated microsomes was partially inhibited by TPCK, TLCK, and leupeptin. The most effective inhibitor was, however, colligin. In its presence, the breakdown of procollagen I, but not of fibronectin, was specifically inhibited. Colligin itself was not degraded by the microsomal preparations. The protein degrading activity was localized to the microsomal membranes, and showed a pH optimum of about 8.0. From these studies it is inferred that one of the roles of colligin may be to protect the procollagen I chains in the ER from degradation prior to their transport to the cis-Golgi compartment.