Most neuroendocrine peptides are generated by proteolysis of the precursors at basic residue cleavage sites. Prohormone convertases belonging to the subtilisin family of serine proteases are primarily responsible for processing at these ‘classical sites’. In addition to the ‘classical’ cleavages, a subset of bioactive peptides is generated by processing at ‘non-classical’ sites. The proteases responsible for these cleavages have not been well explored. Members of several metalloprotease families have been proposed to be involved in non-classical processing. Among them, endothelin converting enzyme-2 (ECE-2) is a good candidate since it exhibits a neuroendocrine distribution and an acidic pH optimum. In order to examine the involvement of this protease in neuropeptide processing, we purified the recombinant enzyme and characterized its catalytic activity. Purified ECE-2 efficiently processes big endothelin-1 to endothelin-1 by cleavage between Trp21-Val22 at acidic pH. In order to characterize the substrate specificity of ECE-2, we used a panel of 42 peptides as substrates and mass spectrometry to identify the products. Only ten of these 42 peptides were processed by ECE-2. A comparison of residues around the cleavage site revealed that ECE-2 exhibits a unique cleavage site selectivity that is related to, but distinct from that of ECE-1. The enzyme is able to generate a number of biologically active peptides from peptide intermediates, suggesting an important role for this enzyme in the biosynthesis of regulatory peptides. Taken together, these results are consistent with an important role for ECE-2 in the processing of regulatory peptides at non-classical sites.