We have cloned the gene of a new transmembrane-type serine protease from rat kidney, which activates sodium channels. The amino acid sequence deduced from a full-length cDNA revealed that transmembrane serine protease-1 (TMSP-1) is a member of the clan SA/family S1 of serine proteases, comprising a 30 amino acid prepropeptide, a mature form sequence of 274 amino acids starting with the Ile-Val-Gly-Gly-Gln motif, and a common catalytic triad of serine proteases. The hydrophobic amino acid sequence in the carboxy-terminus of this enzyme suggests that it is a glycosylphosphatidylinositol-anchored protein. As revealed by quantitative reverse transcription-polymerase chain reaction analysis, it is highly expressed in kidney, small intestine, and stomach, and moderately expressed in lung, thymus, spleen and skin. The recombinant protease had an optimal pH at 9.0, selectively cleaved synthetic peptide substrates of trypsin, and was inhibited by aprotinin, leupeptin and benzamidine. Immunohistochemical studies revealed that this protease is predominantly expressed in cells from collecting ducts of the renal medulla. We also demonstrate that a C-terminally truncated variant of TMSP-1 significantly activates the epithelial sodium channel, and that its mRNA levels are upregulated by aldosterone. These observations suggest that it is a new member of the trypsin-type transmembrane proteases, which regulate sodium balance by activating the epithelial sodium channel.