Signal peptidase functions to cleave signal peptides from preproteins at the cell membrane. It has a substrate specificity for small uncharged residues at -1 (P1) and aliphatic residues at the -3 (P3) position. Previously, we have reported that certain alterations of the Ile-144 and Ile-86 residues in Escherichia coli signal peptidase I (SPase) can change the specificity such that signal peptidase is able to cleave pro-OmpA nuclease A in vitro after phenylalanine or asparagine residues at the -1 position (Karla, A., Lively, M. O., Paetzel, M. and Dalbey, R. (2005) J. Biol. Chem. 280, 6731-6741). In this study, screening of a fluorescence resonance energy transfer-based peptide library revealed that the I144A, I144C, and I144C/I86T SPase mutants have a more relaxed substrate specificity at the -3 position, in comparison to the wild-type SPase. The double mutant tolerated arginine, glutamine, and tyrosine residues at the -3 position of the substrate. The altered specificity of the I144C/I86T mutant was confirmed by in vivo processing of pre-beta-lactamase containing non-canonical arginine and glutamine residues at the -3 position. This work establishes Ile-144 and Ile-86 as key P3 substrate specificity determinants for signal peptidase I and demonstrates the power of the fluorescence resonance energy transfer-based peptide library approach in defining the substrate specificity of proteases.