A cDNA encoding an ubiquitin-specific processing protease, UBP109, in rat skeletal muscle was cloned and its product was characterized. Northern analysis revealed that UBP109 mRNA is highly expressed in testis and spleen, compared with other tissues. Furthermore, in situ hybridization showed that the level of UBP109 mRNA in liver, spinal cord and brain dramatically changed during embryonic development, indicating that the expression of UBP109 mRNA is developmentally regulated. UBP109 was expressed in Escherichia coli and purified to apparent homogeneity using a (125)I-labelled ubiquitin-peptide fusion as a substrate. The purified enzyme cleaved at the C-terminus of the ubiquitin moiety in natural and engineered fusions irrespective of their sizes. UBP109 also released free ubiquitin from poly-His-tagged penta-ubiquitin. Moreover, it released free ubiquitin from poly-ubiquitinated protein conjugates of rabbit reticulocytes. In addition, UBP109 localized to both the cytoplasm and the nucleus and, among three putative nuclear localization sequences, only the one located near the C-terminus is responsible for nuclear localization. These results suggest that UBP109 may play an important role in generation of free ubiquitin from its precursors and its recycling from poly-ubiquitinated protein conjugates, and hence in regulation of ubiquitin-mediated cellular processes, particularly related to embryonic development.