Human carboxypeptidase (CP) M was expressed in baculovirus-infected insect cells in a glycosylphosphatidylinositol-anchored form, whereas a truncated form, lacking the putative signal sequence for glycosylphosphatidylinositol anchoring, was secreted at high levels into the medium. Both forms had lower molecular masses (50 kDa) than native placental CPM (62 kDa), indicating minimal glycosylation. The predicted glycosylphosphatidylinositol-anchor attachment site was investigated by mutation of Ser(406) to Ala, Thr or Pro and expression in HEK-293 and COS-7 cells. The wild-type and S406A and S406T mutants were expressed on the plasma membrane in glycosylphosphatidylinositol-anchored form, but the S406P mutant was not and was retained in a perinuclear location. The roles of Glu(260) and Glu(264) in CPM were investigated by site-directed mutagenesis. Mutation of Glu(260) to Gln had minimal effects on kinetic parameters, but decreased heat stability, whereas mutation to Ala reduced the k(cat)/ K(m) by 104-fold and further decreased stability. In contrast, mutation of Glu(264) to Gln resulted in a 10000-fold decrease in activity, but the enzyme still bound to p-aminobenzoylarginine-Sepharose and was resistant to trypsin treatment, indicating that the protein was folded properly. These results show that Glu(264) is the critical catalytic glutamic acid and that Glu(260) probably stabilizes the conformation of the active site.