The cysteine proteinase rat cathepsin B was expressed in yeast in an active form and was found to be heterogeneously glycosylated at the consensus sequence for N-linked oligosaccharide substitution. Purified enzyme fractions containing the highest levels of glycosylation were shown to have reduced activity. A glycosylation minus mutant constructed by site-directed mutagenesis (by changing the Ser to Ala in the consensus sequence) was still secreted by the yeast and was shown to be functionally identical with purified rat liver cathepsin B. Recombinant cathepsin B was used to further characterize the pH dependence of cathepsin B-catalyzed hydrolyses using 7-amido-4-methylcoumarin (AMC) and p-nitroaniline (pNA) substrates with arginine as the P1, and either arginine or phenylalanine as the P2 residue. The AMC and pNA groups give insights into the leaving group binding site (P') of cathepsin B. These studies show for the first time that at least seven dissociable groups are involved in substrate binding and hydrolysis in cathepsin B activity. Two of these groups, with pKa values of 6.9 and 7.7 in the recombinant enzyme, are in the leaving group binding site and are most likely His110 and His111. The same groups in rat liver cathepsin B have higher pKa values than in recombinant cathepsin B, but have identical function in the two enzymes. Two other groups are probably the active site Cys29 and His199 with pKa values of 3.6 and 8.6, respectively. A group with a pKa of 5.1 interacts with substrates containing Arg at P2, and the group is most likely Glu245. The remaining two groups, one with a pKa of about 4.9 and the other about 5.3, are most likely carboxyl residues possibly interacting with Arg at P1 in the substrate. The possible candidates on the basis of the x-ray structure are Asp22, Asp69, Glu171, and Glu122, all found within a 13 A radius from the active site thiol of Cys29.