A subclass of proteolytic enzymes that correctly cleave precursor proteins at paired basic residues and are structurally related to the bacterial subtilisins has recently been identified. In yeast, a single membrane-bound proteolytic processing enzyme encoded by the kex2 gene has been found, whereas in higher vertebrates cDNAs encoding four distinct enzymes (PC2, PC3, furin, and PACE 4) have been identified. Like kex2, furin (also known as PACE) contains a hydrophobic transmembrane domain, but PC2, PC3, and PACE 4 lack this feature. All five enzymes exhibit striking similarities in their catalytic domains, and this suggests that they have arisen from a common ancestral subtilisin-like gene. We report here the identification of cDNAs encoding a protein that is similar in structure to PC3 from a simple metazoan, Hydra vulgaris (formerly Hydra attenuata). cDNAs encoding two isoforms of this PC3-like enzyme were obtained that differ only in their carboxyl-terminal sequences, probably due to alternative splicing of a common pre-mRNA. Neither form contains a transmembrane domain. Predicted amino acid sequence comparisons revealed that the hydra PC3-like enzyme is 55.4% and 56.7% identical in the catalytic domain to mouse PC3 and human furin, respectively. RNA blot analyses revealed that the PC3-like RNA is expressed predominantly in the hydra body column and not in the head region, although the hydra head contains a high density of nerve cells, which synthesize a variety of neuropeptides. For this reason, we suspect that another proprotein cleavage enzyme isoform may be expressed in head nerve cells. The isolation of a PC3-like cDNA from hydra is consistent with the presence of neuroendocrine cells and indicates that the PC/furin gene family has been well conserved in all metazoa. A simplified nomenclature for the group of mammalian processing proteases is proposed.