The bone morphogenetic protein (BMP)-1/tolloid metalloproteinases are evolutionarily conserved enzymes that are fundamental to dorsal-ventral patterning and tissue morphogenesis. The lack of knowledge regarding how these proteinases recognize and cleave their substrates represents a major hurdle to understanding tissue assembly and embryonic patterning. Although BMP-1 and mammalian tolloid (mTLD) are splice variants, it is puzzling why BMP-1, which lacks 3 of the 7 noncatalytic domains present in all other family members, is the most effective proteinase. Using a combination of single-particle electron microscopy, small-angle X-ray scattering, and other biophysical measurements in solution, we show that mTLD, but not BMP-1, forms a calciumion-dependent dimer under physiological conditions. Using a domain deletion approach, we provide evidence that EGF2, which is absent in BMP-1, is critical to the formation of the dimer. Based on a combination of structural and functional data, we propose that mTLD activity is regulated by a substrate exclusion mechanism. These results provide a mechanistic insight into how alternative splicing of the Bmp1 gene produces 2 proteinases with differing biological activities and have broad implications for regulation of BMP-1/mTLD and related proteinases during BMP signaling and tissue assembly.procollagen C-proteinase ͉ chordin ͉ small angle X-ray scattering B one morphogenetic protein (BMP)-1 (procollagen Cproteinase-1; PCP-1) and mammalian tolloid (mTLD/ PCP-2) are alternatively spliced products of the Bmp1 gene (1). Together with mammalian tolloid like-1 (mTLL-1) and mTLL-2, they comprise a small group of zinc-and calcium-dependent proteinases, fundamental to tissue patterning and extracellular matrix (ECM) assembly. The BMP-1/TLD family is conserved in species ranging from Drosophila to humans, and their importance is highlighted by the embryonic lethal phenotype of Bmp1/Tll1 homozygous null mice, which display heart malformations and abnormal procollagen processing (2).In vertebrates, BMP-1/TLD proteinases are involved in the biosynthetic processing of a range of ECM precursors, including major and minor fibrillar collagens (3-5), the collagen and elastin cross-linking enzyme prolysyl oxidase (6), cellular anchoring proteins prolaminin-5 and procollagen VII (7,8), and the small leucine-rich proteoglycans osteoglycin and probiglycan (9, 10). BMP-1/TLD proteinases also release a number of TGF- superfamily members, including BMP-2 and BMP-4, growth and differentiation factors (GDF) 8/11, and TGF1 from their corresponding latent complexes. This activity modulates dorsal ventral patterning, growth of skeletal muscle and neural tissue, and cellular behavior, respectively (11-14). These dual roles have fuelled speculation that BMP-1/TLD proteinases orchestrate ECM assembly by means of signaling by TGF--like proteins (15).BMP-1/TLD proteinases contain an N-terminal protease domain followed by CUB (complement, Uegf, and BMP-1) and calcium-ion-binding EGF-like domains. The noncatalyti...