The BP-1/6C3 molecule expressed by early B lineage cells and some stromal cells has been identified as aminopeptidase A (APA). We have previously demonstrated that IL-7 selectively induces BP-1/APA expression by pre-B cells coincident with their growth. Here we directly demonstrate that BP-1 is preferentially expressed by the proliferating subpopulation of normal B cell progenitors. Furthermore, when non-adherent BALB/c bone marrow cells were incubated with IL-7 in the presence of purified BP-1 antibody, B cell precursor proliferation was markedly inhibited. Modulation of the BP-1/6C3 antigen did not occur in the presence of the BP-1 antibody, but APA enzymatic activity was significantly inhibited. The 6C3 antibody, which recognizes a different epitope on the APA molecule, had no effect on either B cell precursor proliferation or APA enzyme activity. We hypothesized that neutralization of APA by the BP-1 antibody results in inhibition of IL-7 driven B cell precursor proliferation. However, when isolated 14.8+ bone marrow cells were cultured with IL-7 in the presence of the BP-1 antibody, no inhibition of proliferation occurred. This data suggested that the effect of the BP-1 antibody might be related to the action of APA on peptides in the marrow microenvironment which are not present in cultures of isolated B cell precursors. The addition of irradiated non-adherent bone marrow cells to the 14.8+ cell cultures restored the inhibitory effect of the BP-1 antibody. Based on these observations, we propose that APA cleaves a small peptide which serves as a natural inhibitor of B cell precursor proliferation.