Plasmepsin II (PM II) is an aspartic protease active in hemoglobin (Hb) degradation in the protozoan parasite Plasmodium falciparum. A fluorescence-quenched octapeptide substrate based on the initial hemoglobin cleavage site is recognized well by PM II. C-terminal extension of this peptide has little effect, but N-terminal extension results in higher maximal velocity and dramatic concentration-dependent substrate inhibition. This inhibition, but not the rate stimulation, depends on the presence of a DABCYL group on the peptide N terminus. Using site-directed mutagenesis, we have identified PM II residues that interact with N-terminal amino acids of peptide substrates. The same residues influence degradation of Hb by PM II. Cathepsin E (CatE), a related mammalian aspartic protease, is also stimulated by N-terminally extended substrates. This suggests that distal substrate interactions as far out as P6 may be a general property of aspartic proteases and may be important in substrate and inhibitor recognition. Although PM II and CatE are similar in their ability to cleave Hb-based peptides and Hb alpha-chains, CatE is not able to degrade native Hb, which is a substrate for PM II. Based on these results, we propose that PM II may have the special feature of being a Hb denaturase.