Carboxypeptidase E (CPE) is involved in the biosynthesis of a number of neuropeptides including opioid peptides. A point mutation in this gene results in a loss of enzyme activity, decrease in mature neuroendocrine peptides, and development of late onset obesity as seen in Cpe(fat)/Cpe(fat) mice. In this study, we examined the processing of peptides derived from prodynorphin and proenkephalin in various brain regions of these mice during development. At 6 to 8 weeks, an age prior to the onset of obesity, levels of dynorphin peptides are decreased in all brain regions, whereas levels of ir-Met-enkephalin are differentially altered. There is an accumulation of C-terminally extended forms of all three opioid peptides in Cpe(fat)/Cpe(fat) mice, consistent with a lack of CPE activity. Thus, it appears that there is no direct correlation between the level of mature opioid peptides and the development of obesity in these mice. Since altered levels of peptides can influence the opioid receptor system, we examined the functional activity of mu and kappa opioid receptors using [35S]guanosine-5'-O-(gamma-thio)-triphosphate binding assays. We find no differences in kappa receptor activity in Cpe(fat)/Cpe(fat) compared with control littermate mice. In contrast, the mu receptor activity is differentially altered in select regions of Cpe(fat)/Cpe(fat) mice in response to a mu-specific ligand. Taken together, these results suggest that the lack of CPE activity leads to alterations in the level of opioid peptides during development and that changes in peptide levels differentially affect opioid receptor activity in vivo.