The serine protease CD26/dipeptidyl-peptidase IV (CD26/DPP IV) and chemokines are known key players in immunological processes. Surprisingly, CD26/DPP IV not only removed the expected Gly1-Pro2 dipeptide from the NH2 terminus of macrophage-derived chemokine (MDC) but subsequently also the Tyr3-Gly4 dipeptide, generating MDC(5-69). This second cleavage after a Gly residue demonstrated that the substrate specificity of this protease is less restricted than anticipated. The unusual processing of MDC by CD26/DPP IV was confirmed on the synthetic peptides GPYGANMED (MDC(1-9)) and YGANMED (MDC(3-9)). Compared with intact MDC(1-69), CD26/DPP IV-processed MDC(5-69) had reduced chemotactic activity on lymphocytes and monocyte-derived dendritic cells, showed impaired mobilization of intracellular Ca2+ through CC chemokine receptor 4 (CCR4), and was unable to desensitize for MDC-induced Ca2+-responses in CCR4 transfectants. However, MDC(5-69) remained equally chemotactic as intact MDC(1-69) on monocytes. In contrast to the reduced binding to lymphocytes and CCR4 transfectants, MDC(5-69) retained its binding properties to monocytes and its anti-HIV-1 activity. Thus, NH2-terminal truncation of MDC by CD26/DPP IV has profound biological consequences and may be an important regulatory mechanism during the migration of Th2 lymphocytes and dendritic cells to germinal centers and to sites of inflammation.