The activation of pro-hormones and many precursor proteins involves cleavage by endopeptidases belonging to the subtilisin-like family of enzymes. Here we describe the isolation and characterization of the first member of this family from the fission yeast Schizosaccharomyces pombe. The enzyme, which has been named krp for KEX2-related protease, is a type I membrane-bound endopeptidase that cleaves substrates after pairs of dibasic residues. It appears to be synthesized as a pre-pro-protein that is likely to undergo processing following translocation into the endoplasmic reticulum. Processing has been characterized in a cell-free translation/translocation system prepared from Xenopus eggs. Krp is N-glycosylated on all five of its potential sites and both the pre-sequence and the pro-sequence are quickly removed following translocation, the latter probably by autocatalytic cleavage. The inhibitor profile of krp broadly reflects the known properties of the eukaryotic subtilisin proteases, while its pH and Ca2+ dependence are consistent with it being active within the secretory pathway. One of its physiological substrates is likely to be the pheromone precursor pro-P-factor, which it is shown to process in an in vitro system, but identification of other substrates is complicated because, unlike other members of this family, krp is essential for cell viability.