HsIVU is a two-component ATP-dependent protease, consisting of HsIV peptidase and HsIU ATPase. CodW and CodX, encoded by the cod operon in Bacillus subtilis, display 52% identity in their amino acid sequences to HsIV and HsIU in Escherichia coli, respectively. Here we show that CodW and CodX can function together as a new type of two-component ATP-dependent protease. Remarkably, CodW uses its N-terminal serine hydroxyl group as the catalytic nucleophile, unlike HsIV and certain P-type subunits of the proteasomes, which have N-terminal threonine functioning as an active site residue. The ATP-dependent proteolytic activity of CodWX is strongly inhibited by serine protease inhibitors, unlike that of HsIVU. Replacement of the N-terminal serine of CodW by alanine or even threonine completely abolishes the enzyme activity. These results indicate that CodWX in B.subtilis represents the first N-terminal serine protease among all known proteolytic enzymes.