Cephalosporin acylase (CA) precursor is translated as a single polypeptide chain and folds into a self-activating pre-protein. Activation requires two peptide bond cleavages that excise an internal spacer to form the mature ␣ heterodimer. Using Q-TOF LC-MS, we located the second cleavage site between Glu 159 and Gly 160 , and detected the corresponding 10-aa spacer 160 GDPPDLADQG 169 of CA mutants. The site of the second cleavage depended on Glu 159 : moving Glu into the spacer or removing 5-10 residues from the spacer sequence resulted in shorter spacers with the cleavage at the carboxylic side of Glu. The mutant E159D was cleaved more slowly than the wild-type, as were mutants G160A and G160L. This allowed kinetic measurements showing that the second cleavage reaction was a firstorder, intra-molecular process. Glutaryl-7-aminocephalosporanic acid is the classic substrate of CA, in which the N-terminal Ser 170 of the -subunit, is the nucleophile. Glu and Asp resemble glutaryl, suggesting that CA might also remove N-terminal Glu or Asp from peptides. This was indeed the case, suggesting that the N-terminal nucleophile also performed the second proteolytic cleavage. We also found that CA is an acylpeptide hydrolase rather than a previously expected acylamino acid acylase. It only exhibited exopeptidase activity for the hydrolysis of an externally added peptide, supporting the intra-molecular interaction. We propose that the final CA activation is an intramolecular process performed by an N-terminal nucleophile, during which large conformational changes in the ␣-subunit C-terminal region are required to bridge the gap between Glu 159 and Ser 170 .