The collagen prolyl hydroxylases are enzymes that are required for proper collagen biosynthesis, folding, and assembly. They reside within the endoplasmic reticulum and belong to the group of 2-oxoglutarate and iron-dependent dioxygenases. Although prolyl 4-hydroxylase has been characterized as an alpha2beta2 tetramer in which protein disulfide isomerase is the beta subunit with two different alpha subunit isoforms, little is known about the enzyme prolyl 3-hydroxylase (P3H). It was initially characterized and shown to have an enzymatic activity distinct from that of prolyl 4-hydroxylase, but no amino acid sequences or genes were ever reported for the mammalian enzyme. Here we report the characterization of a novel prolyl 3-hydroxylase enzyme isolated from embryonic chicks. The primary structure of the enzyme, which we now call P3H1, demonstrates that P3H1 is a member of a family of prolyl 3-hydroxylases, which share the conserved residues present in the active site of prolyl 4-hydroxylase and lysyl hydroxylase. P3H1 is the chick homologue of mammalian leprecan or growth suppressor 1. Two other P3H family members are the genes previously called MLAT4 and GRCB. In this study we demonstrate prolyl 3-hydroxylase activity of the purified enzyme P3H1 on a full-length procollagen substrate. We also show it to specifically interact with denatured collagen and to exist in a tight complex with other endoplasmic reticulum-resident proteins. Immunohistochemistry with a monoclonal antibody specific for chick P3H1 localizes P3H1 specifically to tissues that express fibrillar collagens, suggesting that other P3H family members may be responsible for modifying basement membrane collagens.