Site-specific mutagenesis techniques have been used to construct active site variants of the Kunitz-type protease inhibitor domain present in the Alzheimer's beta-amyloid precursor protein (APP-KD). Striking alteration of its protease inhibitory properties were obtained when the putative P1 residue, arginine, was replaced with the small hydrophobic residue valine. The altered protein was no longer inhibitory toward bovine pancreatic trypsin, human Factor XIa, mouse epidermal growth factor-binding protein, or bovine chymotrypsin, all of which are strongly inhibited by the unaltered APP-KD (Sinha, S., Dovey, H. F., Seubert, P., Ward, P. J., Blacher, R. W., Blaber, M., Bradshaw, R. A., Arici, M., Mobley, W. C., and Lieberburg, I. (1990) J. Biol. Chem. 265, 8983-8985). Instead, the P1-Val-APP-KD was a potent inhibitor of human neutrophil elastase, with a Ki = 0.8 nM, as estimated by the inhibition of the activity of human neutrophil elastase measured using a chromogenic substrate. It also inhibited the degradation of insoluble elastin by the enzyme virtually stoichiometrically. Replacement of the P1' (Ala) and P2' (Met) residues of P1-Val-MKD with the corresponding residues (Ser, Ile) from alpha 1-proteinase inhibitor resulted in an inactive protein, underscoring the mechanistic differences between the serpins from the Kunitz-type protease inhibitor family. These results confirm the importance of the P1 arginine residue of APP-KD in determining inhibitory specificity, and are also the first time that a single amino acid replacement has been shown to generate a specific potent human neutrophil elastase inhibitor from a human KD sequence.