The yeast PRD1 gene, encoding proteinase yscD, was cloned by complementation of the prd1-6 point mutation. Sequencing of the gene revealed an open reading frame of 2.136 kb, encoding a protein of 712 amino acids with a calculated molecular mass of 81.8 kDa. The sequence HEGLG beginning at residue 501 represents the HEXXH motif, unique for the zinc metallo-peptidases. Sequence comparison revealed complete identity of the proteinase yscD gene with a recently published open reading frame of yeast chromosome III. We found 34.8% identity between proteinase yscD and rat metalloendopeptidase (thimet oligopeptidase, EP 24.15). Proteinase yscD hydrolyzes several chromogenic and fluorogenic peptides that are substrates of thimet oligopeptidase. N-[1-(RS)-carboxy-3-phenylpropyl]-Ala-Ala-Phe-p-aminobenzoic acid, a compound designed as specific inhibitor of EP 24.15, is also a strong inhibitor of the yeast enzyme. Proteinase yscD is a nonvacuolar enzyme. 3-5% of the total enzyme activity can be detected in the intermembrane space of mitochondria. In a mutant carrying a deletion of the PRD1 gene no proteinase yscD activity is detectable in the cytoplasm and in mitochondria of these cells. They do not show any grossly altered phenotype but exhibit a decrease in the intracellular degradation of peptides. This suggests a function of proteinase yscD in the late stages of protein degradation.