Cathepsin X is a novel cysteine protease which was identified recently from the EST (expressed sequence tags) database. In a homology model of the mature cathepsin X, a unique three residue insertion between the Gln22 of the oxyanion hole and the active site Cys31 was found to be located in the primed region of the binding cleft as part of a surface loop corresponding to residues His23 to Tyr27, which we have termed the "mini-loop". From the model, it became apparent that this distinctive structural feature might confer exopeptidase activity to the enzyme. To verify this hypothesis, human procathepsin X was expressed in Pichia pastoris and converted to mature cathepsin X using small amounts of human cathepsin L. Cathepsin X was found to display excellent carboxypeptidase activity against the substrate Abz-FRF(4NO(2)), with a k(cat)/K(M) value of 1.23 x 10(5) M(-)(1) s(-)(1) at the optimal pH of 5.0. However, the activity of cathepsin X against the substrates Cbz-FR-MCA and Abz-AFRSAAQ-EDDnp was found to be extremely low, with k(cat)/K(M) values lower than 70 M(-)(1) s(-)(1). Therefore, cathepsin X displays a stricter exopeptidase activity than cathepsin B. No inhibition of cathepsin X by cystatin C could be detected up to a concentration of 4 microM of inhibitor. From a model of the protease complexed with Cbz-FRF, the bound carboxypeptidase substrate is predicted to establish a number of favorable contacts within the cathepsin X binding site, in particular with residues His23 and Tyr27 from the mini-loop. The presence of the mini-loop restricts the accessibility of cystatin C as well as of the endopeptidase and MCA substrates in the primed subsites of the protease. The marked structural and functional differences of cathepsin X relative to other members of the papain family of cysteine proteases will be of great value in designing specific inhibitors useful as research tools to investigate the physiological and potential pathological roles of this novel enzyme.