Acetylcholinesterase (AChE) is one of the most highly studied enzymes, although its function in many tissues has remained obscure. AChE purified from eel or foetal bovine serum possesses proteolytic activity in addition to esterase activity. The presence of trypsin-like and metallocarboxypeptidase-like activities associated with AChE accounts for its ability to convert enkephalin peptide precursors into enkephalins. Several lines of evidence indicate that AChE's trypsin-like activity is an integral component of the molecule and that it is activated by autolysis. Incubation of affinity-purified eel AChE generated several fragments of low relative molecular mass (Mr). One of these low Mr fragments (Mr = 25,000 Da, 25K) cleaved from the 70K form of AChE, possessed considerable sequence similarity to the N-terminal sequence of pancreatic trypsin. Autolysis of eel AChE may give rise to a neuropeptide processing enzyme.