Pseudomonas exotoxin (PE) requires proteolytic cleavage to generate a 37-kDa C-terminal fragment that translocates to the cytosol and ADP-ribosylates elongation factor 2. Cleavage within cells is mediated by furin, occurs between arginine 279 and glycine 280, and requires an arginine at both P1 and P4 residues. To study the proteolytic processing of PE-derived chimeric toxins, TGFalpha-PE38 (transforming growth factor fused to the domains II and III of PE) and a mutant form, TGFalpha-PE38gly279, were each produced in Escherichia coli. When assessed on various epidermal growth factor (EGF) receptor-positive cell lines, TGFalpha-PE38 was 100-500-fold more toxic than TGFalpha-PE38gly279. In contrast to PE, where cleavage by furin is only evident at pH 5.5, furin cleaved TGFalpha-PE38 over a broad pH range, while TGFalpha-PE38gly279 was resistant to cleavage. TGFalpha-PE38 was poorly toxic for furin-deficient LoVo cells, unless it was first pretreated in vitro with furin. Furin treatment produced a nicked protein that was 30-fold more toxic than its unnicked counterpart. Using the single chain immunotoxin HB21scFv-PE40 as a substrate, furin-mediated processing of an antibody-based immunotoxin was also evaluated. HB21scFv-PE40, which targets cells expressing the transferrin receptor, was cleaved in a similar fashion to that of TGFalpha-PE38 and nicked HB21scFv-PE40 exhibited increased toxicity for LoVo cells. In short-term experiments, the rate of reduction in protein synthesis by furin-nicked immunotoxins was increased compared with unnicked protein, indicating that cleavage by furin can be a rate-limiting step. We conclude that furin-mediated cleavage of PE-derived immunotoxins is important for their cytotoxic activity.