We have investigated the roles of full‐length and carboxyl‐terminus‐truncated forms of the subtilisin‐like prohormone convertase SPC3 in the processing of the radiolabeled vasopressin and oxytocin precursors, in vitro. We found SPC3 cleaves provasopressin at both the vasopressin‐neurophysin and neurophysin‐glycopeptide processing sites. Prooxytocin is cleaved by SPC3 at the oxytocin‐neurophysin cleavage site. However, our results reveal differences in processing of provasopressin by the different molecular forms of SPC3. In incubations where the rate of autocatalytic carboxyl‐terminus truncation of SPC3 was dramatically reduced, 86‐kDa SPC3, which has an unprocessed carboxyl terminus, cleaved provasopressin at the neurophysin‐glycopeptide junction. Cleavage at the vasopressin‐neurophysin junction only occurred with the appearance of carboxyl‐terminus‐truncated forms of the enzyme. Incubations containing 64‐kDa SPC3 or 64‐kDa SPC3‐T, a recombinant form of SPC3 truncated 14 amino acids beyond the conserved carboxyl‐terminal “P‐domain,” rapidly cleaved provasopressin at both the vasopressin‐neurophysin and neurophysin‐glycopeptide junctions. Our results also suggest that prooxytocin is unable to be cleaved by the 86‐kDa form of SPC3. We propose that SPC3 should be considered as a candidate endoprotease in the biosynthesis of vasopressin. Furthermore, we suggest that the carboxyl terminus of SPC3 alters the cleavage specificity of SPC3.