Carboxypeptidase E (CPE) is a carboxypeptidase B-like enzyme involved in the biosynthesis of numerous peptide hormones and neurotransmitters. A sensitive assay for CPE and other carboxypeptidase B-like enzymes has been developed using 125I-acetyl-Tyr-Ala-Arg (125I-AcYAR) as the substrate. This peptide is poorly soluble in ethyl acetate whereas the product of carboxypeptidase B-like enzymatic activity (125I-AcYA) can be quantitatively extracted with this solvent, allowing the rapid separation of product from substrate. This radiometric assay can detect less than 1 pg of either CPE or carboxypeptidase B. For CPE, the assay with 125I-AcYAR is approximately 1000 times more sensitive than a fluorescent assay using dansyl-Phe-Ala-Arg (dans-FAR), and 6000 times more sensitive than a spectrophotometric assay using hippuryl-Arg (hipp-R). CPE hydrolyzes the three substrates with Kcat values of 16 s-1 for AcYAR, 13 s-1 for dans-FAR, and 8.5 s-1 for hipp-R. The Km values for CPE with AcYAR (28 microM) and dans-FAR (34 microM) are similar, and are much lower than the Km with hipp-R (400 microM). Thus, the primary reason for the increased sensitivity of the 125I-AcYAR assay over the fluorescent assay is not a result of kinetic differences but is due to the detection limit of iodinated product (10(-15) mol), compared to the fluorescent product (5 x 10(-11) mol). Applications of this rapid and sensitive radiometric assay to detect CPE in cultured cells and in subcellular fractions of the pituitary are described.