Acute pancreatitis is generally believed to be a disease in which the pancreas is injured by digestive enzymes that it normally produces. Most of the potentially harmful digestive enzymes produced by pancreatic acinar cells are synthesized and secreted as inactive zymogens which are normally activated only upon entry into the duodenum but, during the early stages of acute pancreatitis, those zymogens become prematurely activated within the pancreas and, presumably, that activation occurs within pancreatic acinar cells. The mechanisms responsible for intracellular activation of digestive enzyme zymogens have not been elucidated with certainty but, according to one widely recognized theory (the “co-localization hypothesis"), digestive enzyme zymogens are activated by lysosomal hydrolases when the two types of enzymes become co-localized within the same intracellular compartment. This review focuses on the evidence supporting the validity of the co-localization hypothesis as an explanation for digestive enzyme activation during the early stages of pancreatitis. The findings, summarized in this review, support the conclusion that co-localization of lysosomal hydrolases with digestive enzyme zymogens plays a critical role in permitting the intracellular activation of digestive enzymes that leads to acinar cell injury and pancreatitis.