Stimulating the fission yeast Schizosaccharomyces pombe with mating pheromones brings about responses that lead to cell conjugation. Persistent stimulation does not, however, induce a continuous response as the cells become desensitized to the presence of the pheromone. One mechanism that contributes to desensitization in M-cells is the release of a carboxypeptidase that inactivates the extracellular P-factor pheromone. Production of the carboxypeptidase requires a functional sxa2 gene. In this study, we report the first molecular characterization of the Sxa2 protein and provide direct evidence that it is the carboxypeptidase that degrades P-factor. Sxa2 is synthesized as a precursor that undergoes an internal cleavage event catalysed by a protease with specificity for basic residues. This generates a series of catalytically active N-terminal fragments and an inactive C-terminal fragment. Cleavage is essential for activation of the carboxypeptidase and, although the C-terminal fragment is inactive, it is required for the N-terminal fragment to attain activity.