Surfactant protein C (SP-C) is a lung-specific secreted protein, which is synthesized as a 21-kDa propeptide (SP-C₂₁) and then proteolytically processed as a bitopic transmembrane protein in subcellular compartments distal to the medial Golgi to produce a 3.7 kDa mature form. We have shown that initial processing of SP-C₂₁ involves two endoproteolytic cleavages of the C terminus and that truncation of nine amino acids from the C-flanking peptide resulted in retention of mutant protein in proximal compartments. Because these truncations involved removal of a conserved cysteine residue (Cys¹⁸⁶), we hypothesized that intralumenal disulfide-mediated folding of the C terminus of SP-C₂₁ is required for intracellular trafficking. To test this, cDNA constructs encoding heterologous fusion proteins consisting of enhanced green fluorescent protein (EGFP) attached to the N terminus of wild-type rat proSP-C (EGFP/SP-C^1-194), C-terminally deleted proSP-C (EGFP/SP-C^1-185; EGFP/SP-C^1-191) or point mutations of conserved cysteine residues (EGFP/SP-C^C122G; EGFP/SP-C^C186G; or EGFP/SP-C^C122/186G) were transfected into A549 cells. Fluorescence microscopy revealed that transfected EGFP/SP-C^1-194 and EGFP/SP-C^1-191 were expressed in a punctate pattern within CD-63 positive, EEA-1 negative cytoplasmic vesicles. In contrast, EGFP/SP-C^1-185, EGFP/SP-C^C122G, EGFP/SP-C^C186G and EGFP/SP-C^C122/186G were expressed but retained in a juxtanuclear compartment that stained for ubiquitin and that contained γ-tubulin and vimentin, consistent with expression in aggresomes. Treatment of cells transfected with mutant proSP-C with the proteasome inhibitor lactacysteine enhanced aggresome formation, which could be blocked by coincubation with nocodazole. Western blots using a GFP antibody detected a single form in lysates of cells transfected with EGFP/SP-C cysteine mutants, without evidence of smaller degradation fragments. We conclude that residues Cys¹²² and Cys¹⁸⁶ of proSP-C are required for proper post-translational trafficking. Mutation or deletion of one or both of these residues results in misfolding with mistargeting of unprocessed mutant protein, leading to formation of stable aggregates within aggresomes.