Proteolytic processing alters protein function. Here we present the first systems-wide analysis of endoproteolysis in the genome-reduced pathogen Mycoplasma hyopneumoniae. 669 N-terminal peptides from 164 proteins were identified, demonstrating that functionally diverse proteins are processed, more than half of which 75 (53%) were accessible on the cell surface. Multiple cleavage sites were characterised, but cleavage with arginine in P1 predominated. Putative functions for a subset of cleaved fragments were assigned by affinity chromatography using heparin, actin, plasminogen and fibronectin as bait. Binding affinity was correlated with the number of cleavages in a protein, indicating that novel binding motifs are exposed, and protein disorder increases, after a cleavage event. Glyceraldehyde 3-phosphate dehydrogenase was used as a model protein to demonstrate this. We define the rules governing methionine excision, show that several aminopeptidases are involved, and propose that through processing, genome-reduced organisms can expand protein function.