A cysteine metalloproteinase that degrades 125I-insulin B chain at neutral pH values was isolated from C3H mouse liver. The enzyme was partially purified from the 100,000g supernatant fraction by ammonium sulfate precipitation, DEAE-cellulose chromatography, and fast protein liquid chromatography. The molecular weight of the proteinase was estimated to be 190,000 by gel filtration on Sephadex G-200. Degradation of 125I-insulin B chain by the proteinase was inhibited by p-hydroxymercuribenzoate (PHMB) and iodoacetate (cysteine proteinase inhibitors) and by ethylenediaminetetraacetic acid (EDTA) and 1,10-phenanthroline (metalloproteinase inhibitors). The proteinase also degraded 125I-glucagon but did not hydrolyze 125I-insulin, leucine-2-naphthylamide, or several large proteins. Equivalent levels of EDTA- and PHMB-inhibitable 125I-insulin B chain-degrading activity were observed in the 100,000g supernatant fractions of brain, liver, lung, kidney, heart, and spleen from four mouse strains (C3H/HeN, CBA/J, ICR, and C57BL/6). High levels of 125I-insulin B chain-degrading activity were found in the particulate fraction of kidneys and lungs from these four mouse strains; these activities were inhibited by EDTA but not by PHMB. The activity of the soluble liver cysteine metalloproteinase was not altered in C3H mice treated ip with metal chelators, bacterial endotoxin, phenobarbital, dexamethasone, or insulin. Starvation for 24 or 48 hr and alloxan-induced diabetes diminished total activity of this enzyme in liver by about 50 and 30%, respectively. This soluble polypeptide-degrading enzyme appears to be ubiquitous in mice and to be regulated by nutritional conditions.