The hydrophobic surfactant protein B (SP-B) is synthesized in alveolar type II cells as a 40-kDa precursor protein that is processed via 39- and 23-kDa intermediates to the mature 8-kDa size. To determine the site of SP-B processing, the subcellular distribution of the precursor and mature forms of SP-B was investigated on ultrathin cryosections of human lung using two polyclonal antibodies that discriminate between precursor forms and the mature form of SP-B. An antibody against the human lysosomal membrane glycoprotein CD63 was used to identify organelles in the endosomal/lysosomal pathway. Precursor SP-B was present in the endoplasmic reticulum, the Golgi complex, and multivesicular bodies but was absent from lamellar bodies and plasma membrane. Mature SP-B was present in multivesicular bodies and lamellar bodies but almost completely absent in the endoplasmic reticulum and the Golgi complex. Semiquantitative evaluation of the immunogold labeling by counting the gold particles representing precursor or mature SP-B in the different compartments showed that the mature-to-precursor ratio was low in the endoplasmic reticulum and the Golgi complex (0.13 and 0.11, respectively), increased in the multivesicular bodies to 3.4, and was very high (65) in lamellar bodies. Multivesicular bodies and lamellar bodies contain the lysosomal membrane marker CD63 and are therefore part of the lysosomal pathway. These data strongly suggest that precursor SP-B is proteolytically processed to its mature 8-kDa form intracellularly in an endosomal/lysosomal compartment, most probably in multivesicular bodies.