Bone morphogenetic protein 1 (BMP-1) is part of a complex capable of inducing ectopic bone formation in mammals. Studies on TGF-β1 processing and Drosophila dorsal-ventral patterning have focused attention on BMP-1 as important in mediating the biological activity of this bone inducing complex. Herein, the bacterial expression, refolding, purification, and initial characterization of the BMP-1 proteolytic domain (BPD) are described. A semi-quantitative fluorescence-based thin layer chromatography assay was developed to assist in rapidly screening for optimal renaturation conditions. According to a preliminary screen for optimal conditions for the refolding of BPD , a detectable proteolytic activity against a high turnover substrate for astacin, a homologous protease from crayfish was observed. The conditions identified have allowed the expression of sufficient amounts of BPD for the characterization of the protein. Its proteolytic activity exhibits the same cleavage specificity as astacin against seven substrates that were previously synthesized for studying astacin. Furthermore, this activity is inhibited by the metal chelator 1,10-phenanthroline but not by its analogue 1,7-phenanthroline. The collagenase inhibitor Pro-Leu-Gly hydroxamate was found to inhibit both astacin and BPD activity. The results presented in this paper argue that BMP-1 does in fact possess an intrinsic proteolytic activity.