The direct identification of the intracellular site where proinsulin is proteolytically processed into insulin has been achieved by immunocytochemistry using an insulin-specific monoclonal antibody. Insulin immunoreactivity is absent from the Golgi stack of pancreatic B-cells and first becomes detectable in clathrin-coated secretory vesicles released from the trans Golgi pole. Clathrin-coated secretory vesicles transform into mature noncoated secretory granules which contain the highest concentration of insulin immunoreactive sites. Maturation of clathrin-coated secretory vesicles is accompanied by a progressive acidification of the vesicular milieu, as evidenced by a cytochemical probe that accumulates in acidic compartments whereupon it can be revealed by immunocytochemistry. Thus packaging of the prohormone in secretory vesicles, and acidification of this compartment, are critical steps in the proper proteolytic maturation of insulin.