Procollagen C-proteinase enhancers (PCPE-1 and -2) specifically activate bone morphogenetic protein-1 (BMP-1) and other members of the tolloid proteinase family during C-terminal processing of fibrillar collagen precursors. PCPEs consist of two CUB domains (CUB1 and CUB2) and one NTR domain separated by one short and one long linker. It was previously shown that PCPEs can strongly interact with procollagen molecules, but the exact mechanism by which they enhance BMP-1 activity remains largely unknown. Here, we used a series of deletion mutants of PCPE-1 and two chimeric constructs with repetitions of the same CUB domain to study the role of each domain and linker. Out of all the forms tested, only those containing both CUB1 and CUB2 were capable of enhancing BMP-1 activity and binding to a mini-procollagen substrate with nanomolar affinity. Both these properties were lost by individual CUB domains, which had dissociation constants at least three orders of magnitude higher. In addition, none of the constructs tested could inhibit PCPE activity, although CUB2CUB2NTR was found to modulate BMP-1 activity through direct complex formation with the enzyme, resulting in a decreased rate of substrate processing. Finally, increasing the length of the short linker between CUB1 and CUB2 was without detrimental effect on both activity and substrate binding. These data support the conclusion that CUB1 and CUB2 bind to the procollagen substrate in a cooperative manner, involving the short linker that provides a flexible tether linking the two binding regions.Tolloid proteinases have been shown to play important roles during embryogenesis and tissue remodeling. They control extracellular matrix synthesis as well as morphogenetic events such as dorso-ventral patterning, neural differentiation, and muscle growth (1). This control is achieved through proteolytic modifications of several matrix components (fibrillar and nonfibrillar procollagens, small leucine-rich proteoglycans, laminin 332, perlecan, and others), enzymes (lysyl oxidases) and growth factors or associated molecules (chordin, latent transforming growth factor--binding protein-1, growth differentiation factors 8 and 11, prolactin, and others). In mammals, the tolloid family includes bone morphogenetic protein-1 (BMP-1), 2 mammalian tolloid, and mammalian tolloid like-1 and -2 (2). BMP-1 and mammalian tolloid are also known as "procollagen C-proteinases" (PCPs), because one of their key functions is to trigger collagen fibrillogenesis through cleavage of the C-terminal propeptides in fibrillar procollagens (3). Collagen fibrils then provide a scaffold for further deposition of other matrix molecules.Tolloid enzymes are assisted during collagen maturation by the procollagen C-proteinase enhancers-1 and -2 (PCPE-1 and -2), which can increase tolloid activity on the major fibrillar procollagens by Ͼ10-fold (4, 5) while not affecting the cleavage of other known tolloid substrates (6). PCPEs are rather small extracellular glycoproteins (ϳ50 kDa) consisting of, from the N ...