The vitamin K-dependent gamma-glutamyl carboxylase binds an 18-amino acid sequence usually attached as a propeptide to its substrates. Price and Williamson (Protein Sci. (1993) 2, 1997-1998) noticed that residues 495-513 of the carboxylase shares similarity with the propeptide. They suggested that this internal propeptide could bind intramolecularly to the propeptide binding site of carboxylase, thereby preventing carboxylation of substrates lacking a propeptide recognition sequence. To test Price's hypothesis, we created nine mutant enzyme species that have single or double mutations within this putative internal propeptide. The apparent K(d) values of these mutant enzymes for human factor IX propeptide varied from 0.5- to 287-fold when compared with that of wild type enzyme. These results are consistent with the internal propeptide hypothesis but could also be explained by these residues participating in propeptide binding site per se. To distinguish between the two alternative hypotheses, we measured the dissociation rates of propeptides from each of the mutant enzymes. Changes in an internal propeptide should not affect the dissociation rates, but changes to a propeptide binding site may affect the dissociation rate. We found that dissociation rates varied in a manner consistent with the apparent K(d) values measured above. Furthermore, kinetic studies using propeptide-containing substrates demonstrated a correlation between the affinity for propeptide and V(max). Taken together, our results indicated that these mutations affected the propeptide binding site rather than a competitive inhibitory internal propeptide sequence. These results agree with our previous observations, indicating that residues in this region are involved in propeptide binding.