Many phytopathogenic bacteria use a type III secretion system to deliver type III effector proteins into the host plant cell. The Pseudomonas syringae type III effector AvrRpt2 is cleaved at a specific site when translocated into the host cell. In this study, we first demonstrate that the factor(s) required for AvrRpt2 cleavage is present in extracts from animal and yeast cells, as well as plant cells. The cleavage factor in animal and plant cell extracts was heat labile but relatively insensitive to protease inhibitors. Second, mutational analysis of AvrRpt2 was applied to identify features important for its cleavage. In addition to two of the amino acid residues in the immediate vicinity of the cleavage site, a large part of the region C-terminal to the cleavage site was required when AvrRpt2 was cleaved in animal cell extract. Most of these features were also important when AvrRpt2 was cleaved in plant cells. Third, we investigated the effect of cleavage in interactions of AvrRpt2 with plant cells. Cleavage of AvrRpt2 appeared to be important for proper interactions with Arabidopsis cells that lack the resistance gene product corresponding to AvrRpt2, RPS2. In addition, removal of the region N-terminal to the cleavage site was important for the correct localization of the C-terminal effector region of the protein in the host cell. We speculate that the virulence function of AvrRpt2 requires removal of the N-terminal region to redirect the effector protein to a specific subcellular location in the host cell after translocation of the protein.