Cachectin/tumor necrosis factor is initially synthesized as a 26 kilodalton prohormone. This molecule is 76 (human) or 79 (mouse) amino acids longer than the mature protein, as a result of additional residues present at the amino terminus. A short hydrophobic stretch of amino acids serves to anchor the prohormone in lipid bilayers; the mature protein, as well as a partially processed form of the hormone, are secreted after cleavage of the propeptide. We have analyzed the cleavage of the murine propeptide as it occurs in RAW 264.7 cells and now report that scission occurs at a site within the propeptide fragment, 10 residues before the amino-terminal leucine of the mature protein. This incompletely processed form of the molecule also begins with a leucine residue. Although secreted as a soluble product, it is biologically inactive in the L-929 cell cytotoxicity assay.