CPD-N is a cytokine-inducible CPD (carboxypeptidase-D) isoform identified in rat Nb2 T-lymphoma cells. The prototypic CPD (180 kDa) has three CP domains, whereas CPD-N (160 kDa) has an incomplete N-terminal domain I but intact domains II and III. CPD processes polypeptides in the TGN (trans-Golgi network) but the Nb2 CPD-N is nuclear. The present study identified a cryptic exon 1′, downstream of exon 1 of the rat CPD gene, as an alternative transcription start site that encodes the N-terminus of CPD-N. Western-blot analysis showed exclusive synthesis of the 160 kDa CPD-N in rat Nb2 and Nb2-Sp lymphoma cells. Several haematopoietic cell lines including human K562 myeloma, Jurkat T-lymphoma and murine CTLL-2 cytotoxic T-cells express a 160 kDa CPD-immunoreactive protein, whereas mEL4 T-lymphoma cells express the 180 kDa CPD. The CPD-immunoreactive protein in hK562 cells is also nuclear and cytokine-inducible. In contrast, MCF-7 breast cancer cells express only the 180 kDa CPD, which is mainly in the TGN. CPD/CPD-N assays using substrate dansyl-L-alanyl-L-arginine show approx. 98% of CPD-N activity in the Nb2 nucleus, whereas MCF-7 CPD activity is enriched in the post-nuclear 10000 g pellet. The K_m for CPD-N and CPD are 132±30 and 63±9 μM respectively. Specific activity/K_m ratios show that dansyl-L-alanyl-L-arginine is a better substrate for CPD-N than for CPD. CPD-N has an optimal pH of 5.6 (due to domain II), whereas CPD has activity peaks at pH 5.6 (domain II) and pH 6.5–7.0 (domain I). CPD and CPD-N are inhibited non-competitively by zinc chelator 1,10-phenanthroline and competitively by peptidomimetic inhibitor DL-2-mercaptomethyl-3-guanidinoethylthiopropanoic acid. The Nb2 CPD-N co-immunoprecipitated with phosphatase PP2A (protein phosphatase 2A) and α4 phosphoprotein. In summary, a cytokine-inducible CPD-N is selectively expressed in several haematopoietic tumour cells. Nuclear CPD-N is enzymatically active and interacts with known partners of CPD.