Soluble forms of Bacillus signal peptidases which lack their unique amino-terminal membrane anchor are prone to degradation, which precludes their high-level production in the cytoplasm of Escherichia coli. Here, we show that the degradation of soluble forms of the Bacillus signal peptidase SipS is largely due to self-cleavage. First, catalytically inactive soluble forms of this signal peptidase were not prone to degradation; in fact, these mutant proteins were produced at very high levels in E. coli. Second, the purified active soluble form of SipS displayed self-cleavage in vitro. Third, as determined by N-terminal sequencing, at least one of the sites of self-cleavage (between Ser15 and Met16 of the truncated enzyme) strongly resembles a typical signal peptidase cleavage site. Self-cleavage at the latter position results in complete inactivation of the enzyme, as Ser15 forms a catalytic dyad with Lys55. Ironically, self-cleavage between Ser15 and Met16 cannot be prevented by mutagenesis of Gly13 and Ser15, which conform to the -1, -3 rule for signal peptidase recognition, because these residues are critical for signal peptidase activity.