Upon entering mammalian cells, Pseudomonas exotoxin A (PE) is proteolytically processed by furin to produce an N-terminal fragment of 28 kDa and a C-terminal fragment of 37 kDa. Cleavage is followed by the reduction of a key disulfide bond (cysteines 265-287). This combination of proteolysis and reduction releases the 37 kDa C-terminal fragment, which then translocates to the cytosol where it ADP-ribosylates elongation factor 2 and inhibits protein synthesis. To investigate toxin reduction, furin-nicked PE or a hypercleavable mutant, PEW281A, was subjected to various treatments and then analyzed for fragment production. Reduction was evident only when unfolding conditions and a reducing agent were applied. Thermal unfolding of PE, as evidenced by changes in alpha-helical content and increased sensitivity to trypsin, rendered nicked toxin susceptible to protein disulfide isomerase- (PDI-) mediated reduction. When subcellular fractions from toxin-sensitive cells were incubated with nicked PE, toxin unfolding and reducing activities were present in the membrane fraction but not the soluble fraction. These data indicate that PE reduction is a two-step process: unfolding that allows access to the Cys265-287 disulfide bond, followed by reduction of the sulfur-sulfur bond by PDI or a PDI-like enzyme. With regard to cellular processing, we propose that the toxin's three-dimensional structure retains a "closed" conformation that restricts solvent access to the Cys265-287 disulfide bond until after a cell-mediated unfolding event.