Ornithine transcarbamylase (ornithine carbamoyltransferase, EC 2.1.3.3), the second enzyme of urea synthesis, is localized in the matrix of liver mitochondria of ureotelic animals. The enzyme is encoded by a nuclear gene, synthesized outside the mitochondria, and must then be transported into the organelle. The rat liver enzyme is initially synthesized on membrane-free polysomes in the form of a larger precursor with an amino-terminal extension of 3 400-4 000 daltons. In rat liver slices and isolated rat hepatocytes, the pulse-labeled precursor is first released into the cytosol and is then transported with a half life of 1-2 min into the mitochondria where it is proteolytically processed to the mature form of the enzyme. The precursor synthesized in vitro exists in a highly aggregated form and has a conformation different from that of the mature enzyme. The precursor has an isoelectric point (pI = 7.9) higher than that of the mature enzyme (pI = 7.2). The precursor synthesized in vitro can be taken up and processed to the mature enzyme by isolated rat liver mitochondria. The mitochondrial transport and processing system requires membrane potential and a high integrity of the mitochondria. The transport and processing activities are conserved between mammals and birds or amphibians and is presumably common to more than one precursor. Potassium ion, magnesium ion, and probably a cytosolic protein(s), in addition to the transcarbamylase precursor and the mitochondria, are required for the maximal transport and processing of the precursor. A mitochondrial matrix protease which converts the precursor to a product intermediate in size between the precursor and the mature subunit has been highly purified. The protease has an estimated molecular weight of 108 000 and an optimal pH of 7.5-8.0, and appears to be a metal protease. The protease does not cleave several of the protein and peptide substrates tested. The role of this protease in the precursor processing remains to be elucidated. Rats subjected to different levels of protein intake and to fasting show significant changes in the level of enzyme protein and activity of ornithine transcarbamylase. The dietary-dependent changes in the enzyme level are due mainly to an altered level of functional mRNA for the enzyme. In contrast, during fasting, the increase in the enzyme level is associated with a decreased level of translatable mRNA for the enzyme. Pathological aspects of ornithine transcarbamylase including the enzyme deficiency and reduced activities of the enzyme in Reye's syndrome are also described. A possibility that impaired transport of the enzyme precursor into the mitochondria leads to a reduced enzyme activity, is proposed.