Cathepsin P is a recently discovered placental cysteine protease that is structurally related to the more ubiquitously expressed, broad-specificity enzyme, cathepsin L. We studied the substrate specificity requirements of recombinant mouse cathepsin P using fluorescence resonance energy transfer (FRET) peptides derived from the lead sequence Abz-KLRSSKQ-EDDnp (Abz, ortho-aminobenzoic acid and EDDnp, N-[2,4-dinitrophenyl]ethylenediamine). Systematic modifications were introduced resulting in five series of peptides to map the S(3) to S(2)(') subsites of the enzyme. The results indicate that the subsites S(1), S(2), S(1)('), and S(2)('), present a clear preference for hydrophobic residues. The specificity requirements of the S(2) subsite were found to be more restricted, preferring hydrophobic aliphatic amino acids. The S(3) subsite of the enzyme presents a broad specificity, accepting negatively charged (Glu), positively charged (Lys, Arg), and hydrophobic aliphatic or aromatic residues (Val, Phe). For several substrates, the activity of cathepsin P was markedly regulated by kosmotropic salts, particularly Na(2)SO(4). No significant effect on secondary or tertiary structure could be detected by either circular dichroism or size exclusion chromatography, indicating that the salts most probably disrupt unfavorable ionic interactions between the substrate and enzyme active site. A substrate based upon the preferred P(3) to P(2)(') defined by the screening study, ortho-aminobenzoic-Glu-Ile-Phe-Val-Phe-Lys-Gln-N-(2,4-dinitrophenyl)ethylenediamine (cleaved at the Phe-Val bond) was efficiently hydrolyzed in the absence of high salt. The k(cat)/K(m) for this substrate was almost two orders of magnitude higher than that of the original parent compound. These results show that cathepsin P, in contrast to other mammalian cathepsins, has a restricted catalytic specificity.