Many peptide hormones in a variety of species are produced from larger precursors by limited proteolysis at basic amino acid-containing sites. The marine mollusc Aplysia has homologs of mammalian peptide-processing enzymes, including furin, prohormone convertase 1 (PC1), PC2, and carboxypeptidase E (CPE). A novel neuronal Aplysia enzyme was recently identified that was most closely related to carboxypeptidase D (CPD; Fan and Nagle, DNA Cell Biol. 15, 937-945, 1996), a second carboxypeptidase thought to be present in the secretory pathway and to contribute to peptide hormone processing. We have identified and cloned multiple overlapping bag-cell neuron cDNAs that encode two proteins that are members of the CPD family. Sequence analyses demonstrate that the longer CPD protein (1446 residues) contains an N-terminal signal peptide and four carboxypeptidase-like domains; the third and fourth domains are not predicted to form active enzymes, as several critical residues are absent. The shorter CPD protein is predicted to contain two active carboxypeptidase-like domains. Northern blot analysis identified a major Aplysia CPD mRNA (5.3 kb) and several smaller minor transcripts in central nervous system tissue. The CPD was purified from Aplysia ovotestis using a method previously developed for mammalian CPD. The purified Aplysia CPD binds antisera raised against regions of the protein encoded by the Aplysia cDNA clone, as well as an antiserum raised against duck CPD. The enzymatic properties of purified Aplysia CPD are generally similar to those of mammalian CPD. Aplysia CPD is a candidate prohormone-processing enzyme that may play a role in the processing of Aplysia prohormones in the secretory pathway.