We report in the present study the bioinformatic identification, molecular cloning and biological characterization of matriptase-3, a novel membrane-anchored serine protease that is phylogenetically preserved in fish, birds, rodents, canines and primates. The gene encoding matriptase-3 is located on syntenic regions of human chromosome 3q13.2, mouse chromosome 16B5, rat chromosome 11q21 and chicken chromosome 1. Bioinformatic analysis combined with cDNA cloning predicts a functional TTSP (type II transmembrane serine protease) with 31% amino acid identity with both matriptase/MT-SP1 and matriptase-2. This novel protease is composed of a short N-terminal cytoplasmic region followed by a transmembrane domain, a stem region with one SEA, two CUB and three LDLRa (low-density lipoprotein receptor domain class A) domains and a C-terminal catalytic serine protease domain. Transcript analysis revealed restricted, species-conserved expression of matriptase-3, with the highest mRNA levels in brain, skin, reproductive and oropharyngeal tissues. The full-length matriptase-3 cDNA directed the expression of a 90 kDa N-glycosylated protein that localized to the cell surface, as assessed by cell-surface biotin labelling. The purified activated matriptase-3 serine protease domain expressed in insect cells hydrolysed synthetic peptide substrates, with a strong preference for Arg at position P(1), and showed proteolytic activity towards several macromolecular substrates, including gelatin, casein and albumin. Interestingly, activated matriptase-3 formed stable inhibitor complexes with an array of serpins, including plasminogen activator inhibitor-1, protein C inhibitor, alpha1-proteinase inhibitor, alpha2-antiplasmin and antithrombin III. Our study identifies matriptase-3 as a novel biologically active TTSP of the matriptase subfamily having a unique expression pattern and post-translational regulation.