Perforin is a secreted protein synthesized by activated cytotoxic T lymphocytes (CTL) and natural killer (NK) cells. It is a key component of the lytic machinery of these cells, being able to insert into the plasma membrane of targeted cells, forming a pore which leads to their destruction. Here we analyse the synthesis, processing and intracellular transport of perforin in the NK cell line YT. Perforin is synthesized as a 70 kDa inactive precursor which is cleaved at the C-terminus to yield a 60 kDa active form. This proteolytic cleavage occurs in an acidic compartment and can be inhibited by incubation of the cells in ammonium chloride, concanamycin A, leupeptin and E-64. The increased lytic activity of the cleaved form can be demonstrated by killing assays in which cleavage of the pro-piece is inhibited. Epitope mapping reveals that cleavage of the pro-piece occurs at the boundary of a C2 domain, which we show is able to bind phospholipid membranes in a calcium-dependent manner. We propose that removal of the pro-piece, which contains a bulky glycan, allows the C2 domain to interact with phospholipid membranes and initiate perforin pore formation.