Purification of the large subunit, HYCE, of Escherichia coli hydrogenase 3 revealed that it is a nickel-containing polypeptide, which is subject to C-terminal proteolytic processing. This processing reaction could be performed in vitro with partially purified components, yielding a low-molecular mass C-terminal peptide which was resolved in a Tricine/SDS/polyacrylamide gel. N-terminal sequencing of this peptide revealed that proteolytic cleavage occurred at the C-terminal side of the arginine residue at position 537, which corresponds to the histidine residue in the highly conserved motif, DPCXXCXXH, of other (NiFe) hydrogenases thought to be involved in active site nickel coordination. Nickel-containing HYCE precursor for in vitro processing, was partially purified from strain HD708 (delta hycH) in the presence of the reducing agent dithiothreitol. Using 2-mercaptoethanol instead of dithiothreitol provided pure precursor, which was, however, no longer susceptible to in vitro processing; it proved to be devoid of nickel indicating that nickel incorporation into the HYCE precursor is a prerequisite for processing. This conclusion was supported by the finding that HYCE precursor from strain HD708 (delta hycH) chromatographed with radioactivity from 83Ni incorporated in vivo and could be processed in vitro, whereas HYCE precursor from strain BEF314 (delta hypB-E) lacking the nickel insertion system appeared to be devoid of nickel and was not sensitive to in vitro processing.