A soluble enzyme partially purified from rat muscle is described which degrades insulin proteolylically with a high degree of specificity. The enzyme attacked proinsulin and proinsulin intermediates at only 3 per cent and 10 per cent of the rate with insulin, respectively. Proinsulin competitively inhibited insulin degradation with an inhibition constant of 0.28 μM, whereas the Km for insulin was 0.18 μM. Insulin derivatives with amino or carboxyl terminal residues removed were attacked with Km's about five times greater. Removal of an octapeptide from the B chain of insulin resulted in a Km the same as for insulin. The enzyme is inhibited by the sulfhydryl reagents, N-ethylmaleimide and p-hydroxymercuribenzoate, but not by an inhibitor of the pancreatic proteases, phenylmethylsulfonyl fluoride. The enzymatic activity was not inhibited by a large excess of a number of other proteins and polypeptide hormones. These results suggest that the enzyme is a sulfhydryldependent protease which is quite specific for insulin, parameters studied.