We have overproduced the leader peptidase from Escherichia coli in a high yield by using a T7 RNA polymerase/promoter system and purified the enzyme. This leader peptidase showed an apparent pH optimum of about 10 toward a synthetic peptide substrate, and was stable at temperatures below 40 degrees C. Kinetic studies indicated that one of the active site residues in the enzyme has a pKa value of approximately 7.5. The enzyme was rapidly inactivated by reaction with N-bromosuccinimide (NBS). When approximately two tryptophan residues were oxidized with NBS, the activity was almost completely lost and this inactivation was markedly prevented by a substrate. These NBS-reactive tryptophan residues were identified as Trp300 and Trp310 by a peptide mapping analysis. This indicates that Trp300 and/or Trp310 are critically important for the activity of the leader peptidase. On the other hand, the enzyme was scarcely inhibited by treatment with N-acetylimidazole, iodoacetic acid, 5,5'-dithiobis(2-nitrobenzoic acid), succinic anhydride, or 2,4,6-trinitrobenzenesulfonate. Diethylpyrocarbonate inhibited the enzyme; however, this inhibition did not seem to result from the modification of histidine residues. Thus, there seem to be no functionally important tyrosine, cysteine, or histidine residues or amino groups among the residues which readily react with these reagents. However, the enzyme was inactivated significantly by treatment with phenylglyoxal or 1-ethyl-3-(3-dimethylaminopropyl)carbodiimide. Therefore, some of the arginine residues and the carboxyl groups appear to be important for the enzyme activity.