Deletions have been constructed in the region encoding the 91-amino acid propeptide of the vacuolar enzyme carboxypeptidase Y of Saccharomyces cerevisiae, and in vivo effects of these mutations on the intracellular transport of the mutant proenzymes have been examined. Deletions did not include the vacuolar targeting signal, and none of the mutated forms of procarboxypeptidase Y was found to be secreted. All deletions, however, resulted in a decreased rate of transport of the truncated proenzymes from the endoplasmic reticulum to the Golgi apparatus. Up to 29 residues close to the N terminus can be removed without completely eliminating transport of the mutated proenzymes to the vacuole. However, the C-terminal part of the propeptide contains elements which are essential, since two small deletions, of 9 and 15 residues, respectively, within this area resulted in loss of carboxypeptidase Y activity. This region is, however, not sufficient for efficient formation of active carboxypeptidase Y, since truncated precursors in which the vacuolar targeting signal was fused to the C-terminal part of the proregion did not give rise to active enzyme. Based on the results, we propose that the carboxypeptidase Y propeptide plays an essential role in guiding the proper folding of the protein in vivo and that many parts of the propeptide contribute, in an additive way, to this function.