Aberrant proteins represent an extreme hazard to cells. Therefore, molecular chaperones and proteases have to carry out protein quality control in each cellular compartment. In contrast to the ATP-dependent cytosolic proteases and chaperones, the molecular mechanisms of extracytosolic factors are largely unknown. To address this question, we studied the protease function of DegP, the central housekeeping protein in the bacterial envelope. Our data reveal that DegP processively degrades misfolded proteins into peptides of defined size by employing a molecular ruler comprised of the PDZ1 domain and the proteolytic site. Furthermore, peptide binding to the PDZ domain transforms the resting protease into its active state. This allosteric activation mechanism ensures the regulated and rapid elimination of misfolded proteins upon folding stress. In comparison to the cytosolic proteases, the regulatory features of DegP are established by entirely different mechanisms reflecting the convergent evolution of an extracytosolic housekeeping protease.