The neuroendocrine protein 7B2 has been implicated in activation of prohormone convertase 2 (PC2), an important neuroendocrine precursor processing endoprotease. To test this hypothesis, we created a null mutation in 7B2 employing a novel transposon-facilitated technique and compared the phenotypes of 7B2 and PC2 nulls. 7B2 null mice have no demonstrable PC2 activity, are deficient in processing islet hormones, and display hypoglycemia, hyperproinsulinemia, and hypoglucagonemia. In contrast to the PC2 null phenotype, these mice show markedly elevated circulating ACTH and corticosterone levels, with adrenocortical expansion. They die before 9 weeks of severe Cushing's syndrome arising from pituitary intermediate lobe ACTH hypersecretion. We conclude that 7B2 is indeed required for activation of PC2 in vivo but has additional important functions in regulating pituitary hormone secretion.