Several recently discovered members of the carboxypeptidase E (CPE) gene family lack critical active site residues that are conserved in other family members. For example, three CPE-like proteins contain a Tyr in place of Glu300 (equivalent to Glu270 of carboxypeptidase A and B). To investigate the importance of this position, Glu300 of rat CPE was converted into Gln, Lys, or Tyr, and the proteins expressed in Sf9 cells using the baculovirus system. All three mutants were secreted from the cells, but the media showed no enzyme activity above background levels. Wild-type CPE and the Gln300 point mutant bound to a p-aminobenzoyl-Arg-Sepharose affinity resin, and this binding was competed by an active site-directed inhibitor, guanidinoethylmercaptosuccinic acid. The affinity purified mutant CPE protein showed no detectable enzyme activity (<0.004% of wild-type CPE) toward dansyl-Phe-Ala-Arg. Expression of the Gln300 and Lys300 mutant CPE proteins in the NIT3 mouse pancreatic beta-cell line showed that these mutants are routed into secretory vesicles and secreted via the regulated pathway. Taken together, these results indicate that Glu300 of CPE is essential for enzyme activity, but not required for substrate binding or for routing into the regulated secretory pathway.