Proglucagon is processed differentially in the pancreatic alpha cells and the intestinal L cells to yield either glucagon or glucagon-like peptide 1, respectively, structurally related hormones with opposing metabolic actions. Here, we have studied the processing of proglucagon in alpha TC1-6 cells, an islet-cell line transformed by simian virus 40 large tumor (T) antigen, a model of the pancreatic alpha cell. We found that these cells process proglucagon at certain dibasic cleavage sites to release glucagon and only small amounts of glucagon-like peptide 1, as demonstrated by both continuous and pulse-chase labeling experiments. Both normal islet alpha cells and alpha TC1-6 cells were shown to express the prohormone convertase PC2 at high levels, but not the related protease PC3. Expression of PC2 antisense RNA in alpha TC1-6 cells inhibited both PC2 production and proglucagon processing concomitantly. We conclude that PC2 is the key endoprotease responsible for proglucagon processing in cells with the alpha-cell phenotype.