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Interleukin-1 beta (IL-1 beta)-converting enzyme (ICE) is a novel cysteine protease that cleaves the 31-kD inactive cytoplasmic IL-1 beta precursor into active extracellular 17-kD IL-1 beta. The ICE gene product is a 45-kD proenzyme that requires proteolytic processing to activate ICE. Active ICE is a heterodimer consisting of equal amounts of p20 and p10 subunits. Generation of active ICE is affected by the removal of an 11-kD NH2-terminal precursor domain (p11) and an internal 19-amino acid sequence that separates the 20- and 10-kD subunits. Immuno-electron microscopy was performed on human monocytes with immunoglobulins recognizing the active (p20) or precursor (p11) domains of ICE. Elutriated monocytes were stimulated with 50 pM lipopolysaccharide followed by heat-killed Staphylococcus aureus under conditions that induce maximal rates of IL-1 beta secretion. Ultrathin cryosections were cut from fixed frozen pellets of these monocytes and were immunogold labeled with either antibody. Active and precursor domain ICE epitopes were localized in the cytoplasmic ground substance, but they were not detected within the endoplasmic reticulum, the Golgi apparatus, and secretory granules of activated or inactive monocytes. Importantly, numerous ICE p20 epitopes were also observed on the extracellular surfaces of the cell membrane, and were concentrated on the microvilli. Very similar patterns of ICE localization were obtained with unstimulated blood monocytes. In contrast, ICE p11 epitopes were not detected on the surfaces of these monocytes. Likewise, labeling of fixed ultrathin cryosections of monocytes with a biotinylated irreversible ICE inhibitor [Ac-Tyr-Val-Lys(biotin)-Asp-(acyloxy)-methyl- ketone] showed that the compound localized on the outer cell surface as well, and to a lesser extent, within the cytoplasmic ground substance. Furthermore, antipeptide antibodies specific for either the mature or precursor domains of IL-1 beta were both localized upon the cell membrane after stimulation of IL-1 beta secretion. Lipopolysaccaride- primed monocytes that synthesized, but did not secrete IL-1 beta, exhibited only cytoplasmic staining. The data suggests that mature IL-1 beta is generated via cleavage of the 31-kD inactive cytoplasmic IL-1 beta precursor by ICE after association with the plasma membrane during secretion.