A novel poxvirus gene has been characterized within the genome of ectromelia virus. It has significant similarity to a family of lysophospholipases suggesting that it may function in the degradation of lysophospholipids. Since these molecules are active in the stimulation of inflammation, we hypothesize that this gene may play a role in virus virulence. This gene is expressed early in the ectromelia virus replication cycle, before DNA replication. We have also characterized a human cDNA that encodes a protein which is 49.5% identical to the ectromelia virus protein. By its presence in multiple cDNA libraries, this human gene is known to be expressed in a variety of body tissues and is likely to function in the normal regulation of lysophospholipid levels. This family of proteins have conserved blocks of amino acids that are indicative of a serine-aspartic acid-histidine catalytic triad, similar to those used by true lipases and a number of esterases.