Leader peptidase is a novel serine protease in Escherichia coli, which functions to cleave leader sequences from exported proteins. Its catalytic domain extends into the periplasmic space and is anchored to the membrane by two transmembrane segments located at the N-terminal end of the protein. At present, there is no information on the structure of the catalytic domain. Here, we report on the properties of a soluble form of leader peptidase (delta 2-75), and we compare its properties to those of the wild-type enzyme. We find that the truncated leader peptidase has a kcat of 3.0 S-1 and a Km of 32 microM with a pro-OmpA nuclease A substrate. In contrast to the wild-type enzyme (pI of 6.8), delta 2-75 is water-soluble and has an acidic isoelectric point of 5.6. We also show with delta 2-75 that the replacement of serine 90 and lysine 145 with alanine residues results in a 500-fold reduction in activity, providing further evidence that leader peptidase employs a catalytic serine/lysine dyad. Finally, we find that the catalysis of delta 2-75 is accelerated by the presence of the detergent Triton X-100, regardless if the substrate is pro-OmpA nuclease A or a peptide substrate. Triton X-100 is required for optimal activity of delta 2-75 at a level far below the critical micelle concentration. Moreover, we find that E. coli phospholipids stimulate the activity of delta 2-75, suggesting that phospholipids may play an important physiological role in the catalytic mechanism of leader peptidase.