Complementary DNA sequences were cloned from a Drosophila library encoding a 1,101 amino acid polypeptide that we have named dKLIP-1. The deduced protein is structurally similar to the yeast KEX2 prohormone endoprotease including the conserved Asp, His, and Ser catalytic triad residues characteristic of the subtilisin family. When coexpressed in vivo with pro-beta-NGF, dKLIP-1 greatly enhanced the endoproteolytic conversion of the precursor to mature beta-NGF by cleavage at a -Lys- Arg- doublet. In adults, dKLIP-1 transcripts were detected in cortical regions of the CNS and fat body. Most striking, however, was the high level of maternal transcripts deposited into developing oocytes. The temporal and spatial expression of dKLIP-1 mRNAs during embryonic development indicates a potential role for this novel Kex2p-like endoprotease in early embryogenesis and neurogenesis.