Prohormone convertases 1 (PC1) and 2 (PC2) are members of a family of subtilisin-like proprotein convertases responsible for proteolytic maturation of a number of different prohormones and proneuropeptides. Although sharing more than 50% homology in their catalytic domains, PC1 and PC2 exhibit differences in substrate specificity and susceptibility to inhibitors. In addition to these differences, PC2, unlike PC1 and other members of the family, specifically binds the neuroendocrine protein 7B2. In order to identify determinants responsible for the specific properties of the PC2 catalytic domain, we compared its primary sequence with that of other PCs. This allowed us to distinguish a PC2-specific sequence at positions 242-248. We constructed two PC2 mutants in which residues 242 and 243 and residues 242-248 were replaced with the corresponding residues of PC1. Studies of in vivo cleavage of proenkephalin, in vivo production of ␣-MSH from proopiomelanocortin, and in vitro cleavage of a PC2-specific artificial substrate by mutant PC2s did not reveal profound alterations. On the other hand, both mutant pro-PC2s exhibited a considerably reduced ability to bind to 21-kDa 7B2. In addition, inhibition of mutant PC2-(242-248) by the potent natural inhibitor 7B2 CT peptide was almost completely abolished. Taken together, our results show that residues 242-248 do not play a significant role in defining the substrate specificity of PC2 but do contribute greatly to binding 7B2 and are critical for inhibition with the 7B2 CT peptide.