In the tobacco hornworm Manduca sexta, proteolytic activation of prophenoloxidase (proPO) is mediated by three proPO-activating proteinases (PAPs) and two serine proteinase homologs (SPHs) (Proceedings of the National Academy of Sciences, USA 95 (1998) 12220-12225; J. Biol. Chem. 278 (2003a) 3552-3561; Insect Biochem. Mol. Biol. 33 (2003b) 1049-1060). While our current data are consistent with the hypothesis that the SPHs serve as a cofactor/anchor for PAPs (Insect Biochemistry and Molecular Biology 33 (2003) 197-208; Insect Biochemistry and Molecular Biology 34 (2004) 731-742), roles of these clip-domain proteins (i.e. PAPs and SPHs) in proPO activation are poorly defined. To better understand this process, we further characterized the activation reaction using proPO, PAP-1 and SPHs. PAP-1 itself cleaved nearly 1/3 of proPO at Arg51 without generating much phenoloxidase (PO) activity. In the presence of SPHs, the cleavage of proPO became more complete while the increase in PO activity was over 20-fold, indicating that the extent of cleavage does not directly correlate with PO activity. Since SPHs and p-amidinophenyl methanesulfonyl fluoride (APMSF)-treated PAP-1 did not generate active PO by interacting with proPO, proteolytic cleavage is critical for proPO activation. After 1/5 of proPO was processed by PAP-1 alone which was then inactivated by M. sexta serpin-1J or APMSF, further incubation of the reaction mixture with SPHs failed to generate active PO either. Thus, SPHs cannot generate PO activity by simply binding to cleaved proPO. M. sexta proPO activation requires active PAP-1 and SPHs at the same time-one for limited proteolysis and the other as a cofactor, perhaps. Gel filtration chromatography and native gel electrophoresis revealed the PAP-SPH, proPO-PAP, and SPH-proPO associations, essential for generating high Mr, active PO at the site of infection.