Capillary damage induced in sheep by intravenous infusion of Escherichia coli endotoxin, oleic acid, or air emboli causes the appearance in lung lymph of a serine protease with trypsin-like activity. The time course of the appearance of the enzyme and the extent of its activity increase indicate a close association with capillary injury. The enzyme was isolated from active lymph after a 9,000-fold purification by affinity chromatography on Reactive Blue-agarose, aprotinin-agarose, and p-amino-benzamidine-agarose columns. The protein, molecular mass of 70-75 kDa, is composed of two polypeptide chains of 31 and 43 kDa linked by disulfide bonds. Studies with synthetic peptide and thioester substrates showed preferential cleavage of substrates having two or more basic amino acids and the importance for activity of secondary enzyme-substrate interactions at sites removed from the scissile bond. The specificity of the enzyme and its pattern of sensitivity to inhibition by a series of isocoumarin derivatives distinguish it from enzymes of the clotting and complement systems and also from tissue plasminogen activator and lung and skin tryptase. The origin of the enzyme, its role in capillary damage, and its physiological function remain to be established.