The neuroendocrine protein 7B2 is a binding protein for the prohormone convertase 2 (PC2) and is required for the intracellular conversion of proPC2 to active PC2. Both full-length 7B2 and its carboxy-terminal 31-residue peptide (CT peptide) are capable of potent inhibition of PC2; the 7B2 protein thus regulates both the biosynthesis and the activity of PC2. Vertebrate 7B2s are highly conserved (92%-97% homology), and thus, species comparison has not been informative in assessing the crucial protein domains responsible for bioactivity. We here report the cloning of the Caenorhabditis elegans 7B2 protein. Although weakly conserved with the vertebrate sequences (23% similarity with mouse 7B2), C. elegans 7B2 contains the signature PPNPCP motif as well as a highly conserved heptapeptide within the CT peptide. In in vitro assays, C. elegans 7B2 possessed significant inhibitory activity against recombinant vertebrate PC2 (IC50 130 nM), and in two functional tests, the amino-terminal domain of C. elegans 7B2 facilitated the activation of proPC2. We conclude that despite low amino acid conservation overall, both functional domains within 7B2 have been conserved between the C. elegans and the vertebrate proteins.