Duck gp180 was previously identified by its ability to bind to the preS envelope. protein of duck hepatitis B virus particles (Kuroki, K. Cheung R., Marion, P. L., and Ganem, D. (1994) J. Virol, 68, 2091-2096). Cloning and sequencing of gp180 cDNA revealed that it is a polyprotein with three carboxypeptidase-like domains (Kuroki, K., Eng, F., Ishikawa, T., Turck, C., Harada, F., and Ganem, D. (1995) J. Biol. Chem, 270, 15022-15028), To evaluate enzymatic properties of this protein, a soluble 1.70-kDa form of the protein (gp170) lacking the C-terminal transmembrane domain and cytoplasmic tail was expressed in a baculovirus system, The purified 170-kDa protein cleaved 5-dimethylaminonaphthalene-1-sulfonyl (dansyl)-Phe-Ala-Arg with a pH optimum of 5.5-6.5, With this substrate at pH 5.5, the 170-kDa protein displayed a K-m of 12 mu M and a K-cat of 57 s(-1). Dansyl-Pro-Ala-Arg and dansyl-Phe-Phe-Arg were cleaved with K-m values of 17 and 21 mu M, and a K-cat of 57 and 17 s(-1), respectively. Constructs containing only the first or second carboxypeptidase domains also showed enzymatic activity. The effects of inhibitors and ions on enzyme activity of gp170 were generally similar to the effects of these compounds on purified bovine carboxypeptidase D. To evaluate the regions within gp180 necessary for binding preS, a series of deletion mutants mere expressed in the 293T human kidney cell fine, Deletions of the first and second domains, leaving the third domain intact, eliminated carboxypeptidase activity but retained preS binding, Deletion of the third domain eliminated preS binding but not carboxypeptidase activity. These results indicate that the third domain is responsible for preS binding, and this binding does not require carboxypeptidase activity.