Thymocyte-activating molecule (THAM) was initially characterized as a developmentally regulated, dimeric cell-surface molecule capable of activating mouse thymocytes and T lymphocytes upon monoclonal antibody (mAb)-mediated cross-linking. We recently obtained structural evidence indicating that this molecule is the mouse homologue of the human T cell-activating ectoenzyme CD26 (dipeptidyl peptidase IV, DPP IV). We describe here the cloning and the characterization of THAM cDNA. Two clones (3.3 and 2.8 kilobases) were isolated. THAM-3.3 cDNA contains an open reading frame of 2,280 nucleotides that encodes a protein of 760 amino acids having a calculated size of 87,500 Da. Complete N-glycosylation at each of the nine potential sites would result in a mature 110,000-Da molecule. Protein sequence comparisons revealed a significant homology (in particular in the COOH-terminal domain) between THAM and the rat or human DPP IV or the yeast dipeptidyl aminopeptidase B molecules (92, 85, and 30% sequence identity, respectively). Structural comparison of serine proteases (i.e. acyl-amino acid hydrolase or prolyl endopeptidase) with the most conserved domain of THAM identified a stretch of 200 amino acids containing a putative catalytic triad arranged in a novel topological order (Ser-624, Asp-702, and His-734) thereby defining a subfamily of nonclassical serine proteases. Expression of THAM during thymus ontogeny was found to be mainly regulated at the transcriptional level as determined by RNase protection assay. To investigate directly some of the functions which have been ascribed to DPP IV, we transfected an ovalbumin/Aq-reactive, THAM- T hybridoma cell line with THAM-3.3 cDNA. The resultant transfectants acquired (i) DPP IV enzymatic activity that precisely paralleled the density of surface-expressed THAM; (ii) an Mr = 115,000 (reduced) and 110,000/128,000 (nonreduced) molecule that could be immunoprecipitated by the THAM-specific mAb H194-112; and (iii) the capacity of being triggered by this mAb to release interleukin-2. These data indicate that a single cDNA species can encode a multifunctional molecule (e.g. activation signal-transducing structure and ectopeptidase), the heterodimeric state of which very likely results from a differential post-translational modification of the same protein core.