Horse leukocyte elastase inhibitor rapidly forms stable, equimolar complexes with both human leukocyte elastase and cathepsin G, porcine pancreatic elastase, and bovine alpha-chymotrypsin. Formation of the inhibitor-pancreatic elastase complex results in peptide bond cleavage at the reactive site of the inhibitor so that a small peptide fragment representing the carboxyl-terminal sequence of the inhibitor is released. Sequence analysis of both this peptide, as well as that of an overlapping peptide obtained by enzymatic inactivation of native inhibitor with either Staphylococcus aureus metalloproteinase, Pseudomonas aeruginosa elastase, or cathepsin B, yields data which indicate that the reactive site encompasses a P1-P1' Ala-Met sequence. However, unlike the human endothelial plasminogen activator inhibitor, which also has a Met residue in the P1' position, oxidation of the horse inhibitor only slightly reduces its association rate constant with either of the elastolytic enzymes tested or with chymotrypsin. Comparison of the amino acid sequence at or near the reactive site of the horse inhibitor (P2-P18') with members of the serpin superfamily of proteinase inhibitors indicates that it not only belongs in this class but also represents the first example of a functionally active intracellular serpin.