The 72-kDa zinc finger transcription factor PacC, distantly related to Ci/Gli developmental regulators, undergoes two-step proteolytic processing in response to alkaline ambient pH. "Signaling protease" cleavage of PacC 72 removes a processing-inhibitory C-terminal domain, making its truncated PacC 53 product accessible to a second "processing" protease, yielding PacC 27 . Features of the processing proteolysis suggested the proteasome as a candidate protease. We constructed, using gene replacements, two missense active site mutations in preB, the Aspergillus nidulans orthologue of Saccharomyces cerevisiae PRE2 encoding the proteasome 5 subunit. preB1 K101A is lethal. Viable preB2 K101R impairs growth and, like its equivalent pre2 K108R in yeast, impairs chymotryptic activity. pre2 K108R and preB2 K101R active site mutations consistently shift position of the scissile bonds when PacC is processed in S. cerevisiae and A. nidulans, respectively, indicating that PacC must be a direct substrate of the proteasome. preB2 K101R leads to a 2-3-fold elevation in NimE mitotic cyclin levels but appears to result in PacC instability, suggesting an altered balance between processing and degradation.