Endoplasmic reticulum aminopeptidase 1 (ERAP1) is an IFN-gamma-induced aminopeptidase in the endoplasmic reticulum that trims longer precursors to the antigenic peptides presented on MHC class I molecules. We recently reported that purified ERAP1 trimmed N-extended precursors but spared peptides of 8-9 residues, the length required for binding to MHC class I molecules. Here, we show another remarkable property of ERAP1: that it strongly prefers substrates 9-16 residues long, the lengths of peptides transported efficiently into the ER by the transporter associated with antigen processing (TAP) transporter. This aminopeptidase rapidly degraded a model 13-mer to a 9-mer and then stopped, even though the substrate and the product had identical N- and C-terminal sequences. No other aminopeptidase, including the closely related ER-aminopeptidase ERAP2, showed a similar length preference. Unlike other aminopeptidases, the activity of ERAP1 depended on the C-terminal residue of the substrate. ERAP1, like most MHC class I molecules, prefers peptides with hydrophobic C termini and shows low affinity for peptides with charged C termini. Thus, ERAP1 is specialized to process precursors transported by TAP to peptides that can serve as MHC class I epitopes. Its "molecular ruler" mechanism involves binding the hydrophobic C terminus of the substrate 9-16 residues away from the active site.