Clip-domain serine proteases (SPs) are the essential components of extracellular signaling cascades in various biological processes, especially in embryonic development and the innate immune responses of invertebrates. They consist of a chymotrypsin-like SP domain and one or two clip domains at the N-terminus. Prophenoloxidase-activating factor (PPAF)-II, which belongs to the noncatalytic clip-domain SP family, is indispensable for the generation of the active phenoloxidase leading to melanization, a major defense mechanism of insects. Here, the crystal structure of PPAF-II reveals that the clip domain adopts a novel fold containing a central cleft, which is distinct from the structures of defensins with a similar arrangement of cysteine residues. Ensuing studies demonstrated that PPAF-II forms a homo-oligomer upon cleavage by the upstream protease and that the clip domain of PPAF-II functions as a module for binding phenoloxidase through the central cleft, while the clip domain of a catalytically active easter-type SP plays an essential role in the rapid activation of its protease domain.