A novel arginine carboxypeptidase that is generated during blood coagulation is diminished in sera obtained from patients with rheumatoid arthritis. The enzyme, which is unrelated to carboxypeptidase N, is more effective than lysine in removing terminal arginine from small synthetic substrates and may function in vivo in the removal of terminal arginine from inflammatory peptides such as C3a and C5a. Either diminished levels of this enzyme or an inability to generate it may be an important consideration in the mechanisms involved in the local inflammation that is observed in patients with rheumatoid arthritis.