Many secreted proteins are excised from inactive proproteins by cleavage at pairs of basic residues. Recent studies have identified several serine endoproteases that catalyze this cleavage in the secretory pathways of yeast and metazoans. These enzymes belong to the kex2/subtilisin-like family of proprotein convertases. In this paper we describe the molecular characterization of the bli-4 gene from Caenorhabditis elegans, which was shown previously by genetic analysis of lethal mutants to be essential for the normal development of this organism. Sequencing of cDNA and genomic clones has revealed that bli-4 encodes gene products related to the kex2/subtilisin-like family of proprotein convertases. Analysis of bli-4 cDNAs has predicted four protein products, which we have designated blisterases A, B, C, and D. These protein products share a common amino terminus, but differ at the carboxyl termini, and are most likely produced from alternatively spliced transcripts. We have determined the molecular lesions for three bli-4 alleles (h199, h1010, and q508) that result in developmental arrest during late embryogenesis. In each case, the molecular lesions are within exons common to all of the BLI-4 isoforms. The original defining allele of bli-4, e937, is completely viable yet exhibits blistering of the adult cuticle. Molecular analysis of this allele revealed a deletion that removes exon 13, which is unique to blisterase A. No RNA transcript corresponding to exon 13 is detectable in the blistered mutants. These findings suggest that blisterase A is required for the normal function of the adult cuticle.(ABSTRACT TRUNCATED AT 250 WORDS)