We report in vitro studies on the interaction of several substrates with the carboxypeptidase Y-inhibitor complex of yeast. Inhibition of carboxypeptidase Y cleavage of two peptides by carboxypeptidase Y-inhibitor is shown to be competitive. The experiments show a wide variation in the degree of cleavage of a variety of peptide substrates by carboxypeptidase Y, despite the presence of the inhibitor protein. The most likely explanation for this behaviour is a different capacity for the peptides to dissociate the inhibitor protein from the substrate-binding site of carboxypeptidase Y. While the carboxypeptidase Y-inhibitor is insensitive to proteolytic inactivation when complexed with carboxypeptidase Y, it is sensitive when in the free state. Addition of the substrate, N-Cbz-Phe-Leu, to the carboxypeptidase Y-inhibitor complex, however, allows proteolytic inactivation of the inhibitor protein. We suggest that the proteinase-inhibitor may play a crucial role in the regulation of proteinase activity. The inhibitor protein generally protects proteins from unwanted proteinase action. However, it will allow cleavage of proteins which, by some signal triggered metabolically, become substrates due to the exposure of amino acid sequences normally buried, and exhibiting a high affinity for the proteinase.