Type I signal peptidases (SPs) comprise a family of structurally related enzymes that cleave signal peptides from precursor proteins following their transport out of the cytoplasmic space in eukaryotic and prokaryotic cells. One such enzyme, the mitochondrial inner membrane peptidase, has two catalytic subunits, which recognize distinct cleavage site motifs in their signal peptide substrates. The only other known type I SP with two catalytic subunits is the signal peptidase complex (SPC) in the mammalian endoplasmic reticulum. Here, we tested the hypothesis that, as with inner membrane peptidase catalytic subunits, SPC catalytic subunits exhibit nonoverlapping substrate specificity. We constructed two yeast strains without endogenous SP, one expressing canine SPC18 and the other expressing a truncation of canine SPC21 (SPC21 Delta N), which lacks 24 N-terminal residues that prevent expression of SPC21 in yeast. By monitoring a variety of soluble and membrane-bound substrates, we find that, in contrast to the tested hypothesis, SPC catalytic subunits exhibit overlapping substrate specificity. SPC18 and SPC21 Delta N do, however, cleave some substrates with different efficiencies, although no pattern for this behavior could be discerned. In light of the functional similarities between SPC proteins, we developed a membrane protein fragmentation assay to monitor the position of the catalytic sites relative to the surface of the endoplasmic reticulum membrane. Using this assay, our results suggest that the active sites of SPC18 and SPC21 Delta N are located 4-11 A above the membrane surface. These data, thus, support a model that SPC18 and SPC21 are functionally and structurally similar to each other.