Transforming growth factor-beta 1 (TGF-beta 1) is synthesized as a latent high molecular weight complex in a human erythroleukemia cell line, HEL, treated with phorbol 12-myristate 13-acetate. The complex is comprised of three components: mature TGF-beta 1, the TGF-beta 1 latency-associated peptide (beta 1-LAP), and the latent TGF-beta 1-binding protein (LTBP). LTBP plays an important role in the assembly and secretion of the latent TGF-beta 1 complex; if the TGF-beta 1 precursor fails to bind to LTBP, much of it remains inside the cells and may contain anomalous disulfide bond(s) between beta 1-LAP and the mature TGF-beta 1 molecule (Miyazono, K., Olofsson, A., Colosetti, P., and Heldin, C.-H. (1991) EMBO J. 10, 1091-1101). In the present work, we have investigated the subcellular localization and properties of the TGF-beta 1 precursor retained intracellularly. When the HEL cells were metabolically labeled and chased for up to 72 h, a considerable part of the TGF-beta 1 precursor was still observed intracellularly in an unprocessed form. The secreted form of the TGF-beta 1 precursor was resistant to endoglycosidase H, whereas the intracellular form of the TGF-beta 1 precursor was sensitive to endoglycosidase H, regardless of the presence or absence of swainsonine, an inhibitor of mannosidase II. Indirect immunofluorescence microscopy revealed that the TGF-beta 1 precursor co-localized with mannosidase II, a marker for the Golgi complex, but not with protein disulfide isomerase, a marker for the endoplasmic reticulum. The intracellular TGF-beta 1 precursor was prepared from phorbol 12-myristate 13-acetate-treated HEL cells and tested for TGF-beta 1 bioactivity. Half-maximal inhibition of the DNA synthesis in mink lung epithelial cells, Mv1Lu, was observed at 80 pM of the acid-treated TGF-beta 1 precursor, whereas nontreated material showed minimal growth inhibitory activity. Taken together, these results indicate that the TGF-beta 1 precursor is retained inside the cells in the Golgi complex, mainly in a latent, immature form.