Activity-dependent changes in neuropsin gene expression in the hippocampus implies an involvement of neuropsin in neural plasticity. Since the deduced amino acid sequence of the gene contained the complete triplet (His-Asp-Ser) of the serine protease domain, the protein was postulated to have proteolytic activity. Recombinant full-length neuropsin produced in the baculovirus/insect cell system was enzymatically inactive but was readily converted to active enzyme by endoprotease processing. The activational processing of prototype neuropsin involved the specific cleavage of the Lys32-Ile33 bond near its N terminus. Native neuropsin that was purified with a purity of 1,100-fold from mouse brain had enzymatic characteristics identical to those of active-type recombinant neuropsin. Both brain and recombinant neuropsin had amidolytic activities cleaving Arg-X and Lys-X bonds in the synthetic chromogenic substrates, and the highest specific activity was found against Boc-Val-Pro-Arg-4-methylcoumaryl-7-amide. The active-type recombinant neuropsin effectively cleaved fibronectin, an extracellular matrix protein. Taken together, these results indicate that this protease, which is enzymatically novel, has significant limbic effects by changing the extracellular matrix environment.