The development of inhibitors of insulin-regulated aminopeptidase (IRAP), a membrane-bound zinc metallopeptidase, is a promising approach for the discovery of drugs for the treatment of memory loss such as that associated with Alzheimer's disease. There is, however, no consensus in the literature about the mechanism by which inhibition occurs. Sequence alignments, secondary structure predictions, and homology models based on the structures of recently determined related metallopeptidases suggest that the extracellular region consists of four domains. Partial proteolysis and mass spectrometry reported here confirm some of the domain boundaries. We have produced purified recombinant fragments of human IRAP on the basis of these data and examined their kinetic and biochemical properties. Full-length extracellular constructs assemble as dimers with different nonoverlapping fragments dimerizing as well, suggesting an extended dimer interface. Only recombinant fragments containing domains 1 and 2 possess aminopeptidase activity and bind the radiolabeled hexapeptide inhibitor, angiotensin IV (Ang IV). However, fragments lacking domains 3 and 4 possess reduced activity, although they still bind a range of inhibitors with the same affinity as longer fragments. In the presence of Ang IV, IRAP is resistant to proteolysis, suggesting significant conformational changes occur upon binding of the inhibitor. We show that IRAP has a second Zn(2+) binding site, not associated with the catalytic region, which is lost upon binding Ang IV. Modulation of activity caused by domains 3 and 4 is consistent with a conformational change regulating access to the active site of IRAP.