The single 3-hydroxyproline residue in the collagen I polypeptides is essential for proper fibril formation and bone development as its deficiency leads to recessive osteogenesis imperfecta. The vertebrate prolyl 3-hydroxylase (P3H) family consists of three members, P3H1 being responsible for the hydroxylation of collagen I. We expressed human P3H2 as an active recombinant protein in insect cells. Most of the recombinant polypeptide was insoluble, but small amounts were also present in the soluble fraction. P3H1 forms a complex with the cartilage-associated protein (CRTAP) that is required for prolyl 3-hydroxylation of fibrillar collagens. However, coexpression with CRTAP did not enhance the solubility or activity of the recombinant P3H2. A novel assay for P3H activity was developed based on that used for collagen prolyl 4-hydroxylases (C-P4H) and lysyl hydroxylases (LH). A large amount of P3H activity was found in the P3H2 samples with (Gly-Pro-4Hyp)5 as a substrate. The Km and Ki values of P3H2 for 2-oxoglutarate and its certain analogues resembled those of the LHs rather than the C-P4Hs. Unlike P3H1, P3H2 was strongly expressed in tissues rich in basement membranes, such as the kidney. P3H2 hydroxylated more effectively two synthetic peptides corresponding to sequences that are hydroxylated in collagen IV than a peptide corresponding to the 3-hydroxylation site in collagen I. These findings suggest that P3H2 is responsible for the hydroxylation of collagen IV, which has the highest 3-hydroxyproline content of all collagens. It is thus possible that P3H2 mutations may lead to a disease with changes in basement membranes.