We have identified and sequenced a cDNA containing a complete open reading frame for a putative 340-amino acid precursor of the thylakoidal processing peptidase from Arabidopsis thaliana. The predicted amino acid sequence of the protein includes regions highly conserved among Type I leader peptidases and indicates that the enzyme uses a serine-lysine catalytic dyad mechanism. Phylogenetic analysis indicated a common ancestry of the enzyme with those from oxygenic photosynthetic prokaryotes, suggesting that the cDNA encoded the chloroplast enzyme. The catalytic domain was overexpressed in Escherichia coli, generating a product capable of cleaving the thylakoid-transfer domain from a chloroplast protein. Antibodies to the overexpressed polypeptide cross-reacted with a 30-kDa thylakoid membrane protein.