CPA4 (carboxypeptidase A4) is a member of the metallocarboxypeptidase family. CPA4 was originally found in a screen of mRNAs up-regulated by sodium butyrate-induced differentiation of cancer cells. Further studies suggested a relation between CPA4 and prostate cancer aggressiveness. In the present study, we determined that CPA4 is secreted from cells as a soluble proenzyme (pro-CPA4) that can be activated by endoproteases, such as trypsin. Three complementary approaches were used to study the substrate specificity of CPA4; kinetic analysis was performed using a new series of chromogenic substrates and some biologically relevant peptides, the cleavage of synthetic peptides was tested individually, and the cleavage of a mixture of >100 mouse brain peptides was examined using a quantitative peptidomics mass spectrometry-based approach. CPA4 was able to cleave hydrophobic C-terminal residues with a preference for Phe, Leu, Ile, Met, Tyr, and Val. However, not all peptides with C-terminal hydrophobic residues were cleaved, indicating the importance of additional residues within the peptide. Aliphatic, aromatic, and basic residues in the P1 position have a positive influence on the cleavage specificity. In contrast, acidic residues, Pro, and Gly have a negative influence in the P1 position. Some of the peptides identified as CPA4 substrates (such as neurotensin, granins, and opioid peptides) have been previously shown to function in cell proliferation and differentiation, potentially explaining the link between CPA4 and cancer aggressiveness. Taken together, these studies suggest that CPA4 functions in neuropeptide processing and regulation in the extracellular environment.