PAP (pancreatitis-associated protein) is a 16 kDa lectin-like protein, which becomes robustly up-regulated in the pancreatic juice during acute pancreatitis. Trypsin cleaves the N-terminus of PAP, which in turn forms insoluble fibrils. PAP and its paralogue, the pancreatic stone protein, induce bacterial aggregation and, more recently, PAP was shown to bind to the peptidoglycan of Gram-positive bacteria and exert a direct bactericidal effect. However, the role of N-terminal processing in the antibacterial function of PAP has remained unclear. In the present study, we demonstrate that N-terminal cleavage of PAP by trypsin at the Arg37-Ile38 peptide bond or by elastase at the Ser35-Ala36 peptide bond is a prerequisite for binding to the peptidoglycan of the Gram-positive bacterium Bacillus subtilis. The tryptic site in PAP was also efficiently cleaved by nprE (extracellular neutral metalloprotease) secreted from B. subtilis. Trypsin-mediated processing of PAP resulted in the formation of the characteristic insoluble PAP species, whereas elastase-processed PAP remained soluble. N-terminally processed PAP induced rapid aggregation of B. subtilis without significant bacterial killing. The bacteria-aggregating activities of trypsin-processed and elastase-processed PAP were comparable. In contrast with previous reports, the Gram-negative Escherichia coli bacterium was not aggregated. We conclude that N-terminal processing is necessary for the peptidoglycan binding and bacteria-aggregating activity of PAP and that trypsin-processed and elastase-processed forms are functionally equivalent. The observations also extend the complement of proteases capable of PAP processing, which now includes trypsins, pancreatic elastases and bacterial zinc metalloproteases of the thermolysin type.