NK cells induce apoptosis in target cells via the perforin-mediated delivery of granzyme molecules. Cytotoxic human NK cells can be generated by IL-15-mediated differentiation of CD34(+) cells in vitro and these cultures have been used extensively to analyze the development of the NK cell surface phenotype. We have used NK cell differentiation in vitro together with protease-deficient human NK cells to analyze the acquisition of the cytotoxic phenotype. Granzymes are synthesized as inactive zymogens and are proteolytically activated by the cysteine protease cathepsin C. Cathepsin C is also synthesized as a zymogen and activated by proteolysis. We show that human NK cells generated in vitro undergo granule exocytosis and induce the caspase cascade in target cells. IL-15 and stem cell factor (IL-15 plus SCF) induced the expression of the granzyme B and perforin genes and the activation of cathepsin C and granzyme B zymogens. Perforin activation is also mediated by a cysteine protease and IL-15 plus SCF-mediated differentiation was accompanied by perforin processing. However, cathepsin C-deficient human NK cells revealed that perforin processing could occur in the absence of cathepsin C activity. The combination of IL-15 plus SCF is therefore sufficient to coordinate the development of the NK cell surface phenotype with the expression and proteolytic activation of the cytotoxic machinery, reflecting the central role of IL-15 in NK cell development.