The yeast IA 3 polypeptide consists of only 68 residues, and the free inhibitor has little intrinsic secondary structure. IA 3 showed subnanomolar potency toward its target, proteinase A from Saccharomyces cerevisiae, and did not inhibit any of a large number of aspartic proteinases with similar sequences/structures from a wide variety of other species. Systematic truncation and mutagenesis of the IA 3 polypeptide revealed that the inhibitory activity is located in the N-terminal half of the sequence. Crystal structures of different forms of IA 3 complexed with proteinase A showed that residues in the N-terminal half of the IA 3 sequence became ordered and formed an almost perfect ␣-helix in the active site of the enzyme. This potent, specific interaction was directed primarily by hydrophobic interactions made by three key features in the inhibitory sequence. Whereas IA 3 was cut as a substrate by the nontarget aspartic proteinases, it was not cleaved by proteinase A. The random coil IA 3 polypeptide escapes cleavage by being stabilized in a helical conformation upon interaction with the active site of proteinase A. This results, paradoxically, in potent selective inhibition of the target enzyme.Aspartic proteinases participate in a variety of physiological processes, and the onset of pathological conditions such as hypertension, gastric ulcers, and neoplastic diseases may be related to changes in the levels of their activity. Members of this proteinase family, e.g. renin, pepsin, cathepsin D, and human immunodeficiency virus-proteinase are generally typecast on the basis of their susceptibility to inhibition by naturally occurring, small molecule inhibitors such as the acylated pentapeptides, isovaleryl-and acetyl-pepstatin. However, the two most recently identified human aspartic proteinases, -site Alzheimer's precursor protein cleavage enzyme and -site Alzheimer's precursor protein cleavage enzyme 2 (1, 2), are not inhibited by this classical type of inhibitor of this family of enzymes. Pepstatins are metabolic products produced by various species of actinomycetes and, as such, are not themselves gene-encoded. Protein inhibitors of aspartic proteinases are relatively uncommon and are found in only a few specialized locations (3). Examples include renin-binding protein in mammalian kidneys which intriguingly has now itself been identified to be the enzyme, N-acetyl-D-glucosamine-2-epimerase (4); a 17-kDa inhibitor of pepsin and cathepsin E from the parasite, Ascaris lumbricoides (5); proteins from plants such as potato, tomato, and squash (6, 7), and a pluripotent inhibitor from sea anemone of cysteine proteinases as well as cathepsin D (8).The IA 3 polypeptide in yeast is an 8-kDa inhibitor of the vacuolar aspartic proteinase (proteinase A or saccharopepsin) that was initially described by Holzer and co-workers (9). The complete sequence of this 68-residue inhibitor has been elucidated (10, 11) and the inhibitory activity of IA 3 has been shown to reside within the N-terminal half of the molecule (10, 12). ...