To investigate whether or not alternative splicing might be a mechanism by which in Drosophila melanogaster diversity is generated in endoproteases of the novel eukaryotic family of subtilisin-like proprotein processing enzymes, we determined structural and functional characteristics of the Dfur1 gene. Northern blot analysis revealed Dfur1 transcripts of 7.6, 6.5, 4.5 and 4.0 kb. By comparative nucleotide sequence analysis of Dfur1 genomic and cDNA clones, 10 coding exons were identified and, together with Northern blot analysis using exon-specific probes, evidence was obtained that the four transcripts are generated by alternative splicing and polyadenylation. The apparently complete open reading frames of three Dfur1 cDNAs revealed that these coded for three furin-like proteins, Dfurin1 (892 residues), Dfurin1-CRR (1101 residues) and Dfurin1-X (1269 residues), which possessed common but also unique structural domains. These various isoforms of furin in Drosophila were characterized in gene transfer studies using immunoprecipitation analysis. Differential expression of Dfur1 transcripts was found in Northern blot analysis of RNA from various developmental stages of Drosophila. RNA in situ hybridization experiments revealed that the Dfurin1-X and Dfurin1-CRR isoforms are expressed in non-overlapping sets of tissues during Drosophila embryogenesis. In gene transfer experiments in which the Dfurin1, Dfurin1-CRR and Dfurin1-X proteins were expressed at high levels together with the precursor of the beta A-chain of activin-A, a member of the transforming growth factor beta (TGF beta) superfamily, or the precursor of von Willebrand factor, all three proteins appeared capable of processing these substrates. Our studies indicate that the Dfur1 gene encodes structurally different subtilisin-like proprotein processing enzymes with distinct physiological functions in Drosophila.