Macrophage inhibitory cytokine (MIC-1), a divergent member of the transforming growth factor-beta (TGF-beta) superfamily and activation associated cytokine, is secreted as a 28 kDa dimer. To understand its secretion, we examined its processing in MIC-1-transfected Chinese hamster ovary cells. Mature MIC-1 dimer arises post-endoplasmic reticulum (ER) by proteolytic cleavage of dimeric pro-MIC-1 precursor at a furin-like site. Unlike previously characterized TGF-beta superfamily members, MIC-1 dimers are also secreted in constructs lacking the propeptide. A clue to the function of the propeptide came from the observation that a range of proteasome inhibitors, including lactacystin and MG132, cause major increases in levels of undimerized pro-MIC-1 precursor. There was no effect of proteasome inhibitors on cells expressing mature MIC-1 without the propeptide, suggesting that the propeptide can signal misfolding of MIC-1, leading to proteasomal degradation. Deletion mutagenesis showed the N-terminal 28 amino acids of the propeptide are necessary for proteasomal degradation. This is the first demonstration, to our knowledge, of a quality control function in a propeptide domain of a secretory protein and represents an additional mechanism to ensure correct folding of proteins leaving the ER.