VI. Summary Lipoprotein-specific (type II) signal peptidases remove signal peptides from eubacterial lipid-modified preproteins. The comparison of deduced amino acid sequences of 31 knowntype II signal peptidases of gram-positive and gram-negative eubacteria and mycoplasmas have revealed the presence of five conserved domains, containing two strictly conserved Asp residues. Both Asp residues are critical for signal peptidase II activity. Based on the catalytic mechanisms of knownproteases, it is hypothesized that these two residues are directly involved in signal peptidase II-mediated catalysis. This implies that type II signal peptidases belong to a novel family of aspartic proteases. Thus, the type II signal peptidases might be mechanistically related to eubacterial type IV prepilin signal peptidases and eukaryotic aspartic proteases. Computer-assisted analyses indicate that type II signal peptidases are conserved in all eubacteria, in which their prelipoprotein substrates represent about 1–7% of the proteome. In gram-positive eubacteria, such as Bacillus subtilis, lipoproteins are retained in the cytoplasmic membrane. In contrast, lipoproteins of gram-negative eubacteria, such as Escherichia coli, can be either retained in the cytoplasmic membrane, or sorted to the outer membrane via different mechanisms. The general importance of lipoprotein processing by signal peptidase II is underscored by the fact that the absence of signal peptidase II in gram-positive eubacteria leads to lipoprotein instability and the malfunctioning of uncleaved lipoprotein precursors. Moreover, signal peptidase II is essential for cell viability of gram-negative eubacteria.