Human CPN (carboxypeptidase N) is a tetrameric plasma enzyme containing two glycosylated 83 kDa non-catalytic/regulatory subunits that carry and protect two active catalytic subunits. Because CPN can regulate the level of plasminogen binding to cell surface proteins, we investigated how plasmin cleaves CPN and the consequences. The products of hydrolysis were analysed by activity assays, Western blotting, gel filtration and sequencing. When incubated with intact CPN tetramer, plasmin rapidly cleaved the 83 kDa subunit at the Arg457-Ser458 bond near the C-terminus to produce fragments of 72 and 13 kDa, thereby releasing an active 142 kDa heterodimer, and also cleaved the active subunit, decreasing its size from 55 kDa to 48 kDa. Further evidence for the heterodimeric form of CPN was obtained by re-complexing the non-catalytic 72 kDa fragment with recombinant catalytic subunit or by immunoprecipitation of the catalytic subunit after plasmin treatment of CPN using an antibody specific for the 83 kDa subunit. Upon longer incubation, plasmin cleaved the catalytic subunit at Arg218-Arg219 to generate fragments of 27 kDa and 21 kDa, held together by non-covalent bonds, that were more active than the native enzyme. These data show that plasmin can alter CPN structure and activity, and that the C-terminal 13 kDa fragment of the CPN 83 kDa subunit is a docking peptide that is necessary to maintain the stable active tetrameric form of human CPN in plasma.