Many membrane proteins and secreted proteins are synthesized in precursor form with 15 to 30 additional NH2-terminal residues. These "leader peptides" (pre-pieces, signal peptides) are removed as these proteins cross or insert into cellular membranes. "Leader peptidase" activities which catalyze this cleavage have been detected in crude extracts and found to be dependent on membrane fractions. We now describe a 6,000-fold purification of a leader peptidase from the membranes of uninfected Escherichia coli. This leader peptidase was assayed by its ability to cleave the 23-residue leader peptide from procoat, the precursor to bacteriophage M13 coat protein. Immunoprecipitation and amino acid sequencing showed that this enzyme cleaved procoat to produce authentic coat protein. No factors other than the leader peptidase were found to be required for the conversion of procoat protein to coat protein.