We have charterized a Mycobacterium smegmatis gene encoding a homolog of the ATP-dependent protease Lon (La). Our identification of a Lon homolog, in conjunction with our previous work, identifies M. smegmatis as the first known example of a eubacterium containing both Lon and a complete 20S proteasome (containing both alpha- and beta-subunits). Despite the significant primary sequence divergence between M. smegmatis Lon (Ms-Lon) and E. coli Lon (Ec-Lon), expression of Ms-Lon was only moderately toxic to E. coli cells. The ability of E. coli cells to tolerate expression of Ms-Lon reveals that Ms-Lon does not recognize and degrade essential E. coli proteins. We conclude that discrimination against nonsubstrate proteins is broadly conserved between Ec-Lon and Ms-Lon. Additional conservation of substrate recognition was demonstrated by the ability of Ms-Lon to degrade efficiently RcsA, a natural substrate of Ec-Lon. Purified Ms-Lon displays chymotrypsin-like specificity in peptidase assays that are stimulated by unfolded protein and supported by nonhydrolyzed nucleotide analogs. Maximal peptidase activity requires ATP or dATP. Replacement of Ms-Lon's catalytic Ser with Ala (S675A), Thr (S675T), or Cys (S675C) reduced to background levels Ms-Lon's in vitro peptidase activity. However, by employing a sensitive in vivo assay, based on the degradation of RcsA, we demonstrated that the S675C variant retained specific protease activity. Finally, variants of Ms-Lon, with substututions at or near S675, reduce the enzyme's basal ATPase activity, suggesting a structural interaction between the peptidase and ATPase active sites of Ms-Lon.