Chemical details of intramembrane proteolysis remain elusive despite its prevalence throughout biology. We developed a FRET peptide assay for the intramembrane aspartyl protease (IAP) from Methanoculleus marisnigri JR1 in combination with quantitative mass spectrometry cleavage site analysis. IAP can hydrolyze the angiotensinogen sequence, a substrate for the soluble aspartyl protease renin, at a predominant cut site, His-Thr. Turnover is slow (min(-1) × 10(-3)), affinity and Michaelis constant (Km) values are in the low micromolar range, and both catalytic rates and cleavage sites are the same in detergent as reconstituted into bicelles. Three well-established, IAP-directed inhibitors were directly confirmed as competitive, albeit with modest inhibitor constant (Ki) values. Partial deletion of the first transmembrane helix results in a biophysically similar but less active enzyme than full-length IAP, indicating a catalytic role. Our study demonstrates previously unappreciated similarities with soluble aspartyl proteases, provides new biochemical features of IAP and inhibitors, and offers tools to study other intramembrane protease family members in molecular detail.