The Saccharomyces cerevisiae APE1 gene product, aminopeptidase I (API), is a soluble hydrolase that has been shown to be localized to the vacuole. API lacks a standard signal sequence and contains an unusual amino-terminal propeptide. We have examined the biosynthesis of API in order to elucidate the mechanism of its delivery to the vacuole. API is synthesized as an inactive precursor that is matured in a PEP4- dependent manner. The half-time for processing is approximately 45 min. The API precursor remains in the cytoplasm after synthesis and does not enter the secretory pathway. The precursor does not receive glycosyl modifications, and removal of its propeptide occurs in a sec- independent manner. Neither the precursor nor mature form of API are secreted into the extracellular fraction in vps mutants or upon overproduction, two additional characteristics of soluble vacuolar proteins that transit through the secretory pathway. Overproduction of API results in both an increase in the half-time of processing and the stable accumulation of precursor protein. These results suggest that API enters the vacuole by a posttranslational process not used by most previously studied resident vacuolar proteins and will be a useful model protein to analyze this alternative mechanism of vacuolar localization.