The prohormone-processing Kex2 protease of the budding yeast Saccharomyces cerevisiae can be converted from an intracellular membrane protein to a soluble, secreted, and active form by deletion of the transmembrane domain and C-terminal tail. One such molecule was purified to near homogeneity from the culture medium of an overexpressing yeast strain. Amino acid sequence analysis revealed that the N terminus of mature Kex2 protease is created by a potentially autoproteolytic cleavage at Lys'"-Arg, prior to the domain homologous to subtilisin, followed by trimming of Leu-Pro and Val-Pro dipeptides by the Stel3 dipeptidyl aminopeptidase. Kinetic parameters were examined using fluorogenic peptidylmethylcoumarin amide substrates. Initial burst titration indicated that the preparation was entirely active. Measurements of dependence of activity on pH yielded a simple curve suggesting titration of a single ionizable group. Activity was half-maimal at pH 5.7 and nearly constant from pH 6.5 to 9.5. Discrimination between substrates was as great as 360-fold in Km and 130-fold in kt. Substrates with a Lys-Arg dipeptide preceding the cleaved bond were preferred, having ktlKm values up to 1.1 x 107 sec-1 M-'. The enzyme cleaved substrates having Arg-Arg, Pro-Arg, Ala-Arg, and Thr-Arg with increased Km but with unchanged k,,t. In contrast, the enzyme displayed a dramatically lower kt for a Lys-Lys substrate with a smaller increase in K. Thus the two residues preceding the cleaved bond may play distinct roles in the selectivity ofbinding and cleavage of probormone substrates.The Saccharomyces cerevisiae Kex2 protein, a Ca2+-dependent serine protease, is the only enzyme proven by genetic and biochemical evidence to cleave a prohormone (pro-a-factor) at pairs of basic residues in the eukaryotic secretory pathway (1-3). The high specificity of Kex2 protease, homologous to the subtilisin family (4, 5), contrasts with the broad specificity of previously known members of the family, all of which are degradative enzymes. Kex2 and its mammalian homologues furin (5, 6), PC2 (7,8) MATERIALS AND METHODS Expression System. ss-Kex2 was purified from the culture media of strains CB023 and KRY77-3B carrying plasmid pG5-KEX2AC3 (Fig. 1)