Subunit 9 (dicyclohexylcarbodiimide binding protein, 'proteolipid') of the mitochondrial F1F0-ATPase is a nuclearly coded protein in Neurospora crassa. It is synthesized on free cytoplasmic ribosomes as a larger precursor with an NH2-terminal peptide extension. The peptide extension is cleaved off after transport of the protein into the mitochondria. A processing activity referred to as processing peptidase that cleaves the precursor to subunit 9 and other mitochondrial proteins is described and characterized using a cell-free system. Precursor synthesized in vitro was incubated with extracts of mitochondria. Processing peptidase required Mn2+ for its activity. Localization studies suggested that it is a soluble component of the mitochondri...