Lactacystin is a Streptomyces metabolite that inhibits cell cycle progression and induces neurite outgrowth in a murine neuroblastoma cell line. Tritium-labeled lactacystin was used to identify the 20S proteasome as its specific cellular target. Three distinct peptidase activities of this enzyme complex (trypsin-like, chymotrypsin-like, and peptidylglutamyl-peptide hydrolyzing activities) were inhibited by lactacystin, the first two irreversibly and all at different rates. None of five other proteases were inhibited, and the ability of lactacystin analogs to inhibit cell cycle progression and induce neurite outgrowth correlated with their ability to inhibit the proteasome. Lactacystin appears to modify covalently the highly conserved amino-terminal threonine of the mammalian proteasome subunit X (also called MB1), a close homolog of the LMP7 proteasome subunit encoded by the major histocompatibility complex. This threonine residue may therefore have a catalytic role, and subunit X/MB1 may be a core component of an amino-terminal-threonine protease activity of the proteasome.