Circulating antiplasmin-cleaving enzyme (APCE), a prolyl-specific serine proteinase, is essentially identical to membrane-inserted fibroblast activation protein (FAP) that is transiently expressed during epithelial-derived cancer growth. Human precursive alpha(2)-antiplasmin (Met-alpha(2)AP), the only known physiologic substrate for APCE, is cleaved N-terminally to Asn-alpha(2)AP that is rapidly cross-linked to fibrin and protects it from digestion by plasmin. Identifying a specific inhibitor of APCE/FAP continues to be intensely pursued. Recombinant FAP cleavage of peptide libraries of short amino acid sequences surrounding the scissile bond, -Pro(12)-Asn(13)-, indicated that P2 Gly and P1 Pro are required, just as we found for APCE. We examined cleavage of P4-P4' peptides, using 19 amino acid substitutions at each position and selected ones in P8-P5. K(m) values determined for peptide substrates showed that P7 Arg has the highest affinity for APCE. Peptide cleavage rate increased with Arg in P6 rather than P5 or native P7. Placing Arg in P4 or P8 reduced cleavage rates dramatically. Cleavage of substrates with extended peptide sequences before or after the scissile bond showed endopeptidase to be superior to dipeptidase activity for APCE. A substrate analogue inhibitor, Phe-Arg-(8-amino-3,6-dioxaoctanoic acid)-Gly-[r]-fluoropyrrolidide, inhibited APCE with a K(i) of 54 microM but not dipeptidyl peptidase IV even at 2 mM. The inhibitor also blocked cleavage of Met-alpha(2)AP with an IC(50) of 91 microM. Replacing Arg with Gly at the same distance from fluoropyrrolidide as P7 Arg is from P1 Pro reduced its inhibition of APCE approximately 10-fold. Results indicate that Arg at P5, P6, or P7 distances from P1 enhances affinity and efficiency of substrates or inhibitors toward APCE or FAP.