The biological function of the connecting peptide (C-peptide) of proinsulin is unknown. Comparison of all known C-peptide sequences reveals the presence of a highly conserved peptide sequence, Glu/Asp-X-Glu/Asp (X being a hydrophobic amino acid), adjacent to the Arg-Arg doublet at the B chain/C-peptide junction. Furthermore, the next amino acid in the C-peptide sequence is also acidic in many animal species. To test the possible involvement of this hydrophilic domain in insulin biosynthesis, we constructed a mutant of the rat proinsulin II gene lacking the first four amino acids of the C-peptide and expressed either the normal (INS) on the mutated (INSDEL) genes in the AtT20 pituitary corticotroph cell line. In both cases immunoreactive insulin (IRI) was stored by the cells and released upon stimulation by cAMP. In the INS expressing cells, the majority of IRI, whether stored or released in response to a secretagogue, was mature insulin. By contrast, most of the stored and releasable IRI in the INSDEL expressing cells appeared to be (mutant) proinsulin or conversion intermediate with little detectable native insulin. Release of the mutant proinsulin and/or conversion intermediates was stimulated by cAMP. These results suggest that the mutant proinsulin was appropriately targeted to secretory granules and released predominantly via the regulated pathway, but that the C-peptide deletion prevented its conversion to native insulin.