Carboxypeptidase activity was studied in subcellular fractions from a transplantable rat insulinoma and found to be localised principally in the insulin secretory granule. The activity, which was specific for peptide substrates with C-terminal basic amino acids, appeared to be a single enzyme with M r 54 000. This enzyme differed with respect to size and pH optimum from other basic amino acid-specific carboxypeptidases, such as carboxypeptidases B and N, and may be a secretory granule-specific enzyme involved in propolypeptide processing.