Matriptase is a member of the novel family of type II transmembrane serine proteases. It was recently shown that a rare genetic disorder, autosomal recessive ichthyosis with hypotrichosis, is caused by a mutation in the coding region of matriptase. However, the biochemical and functional consequences of the G827R mutation in the catalytic domain of the enzyme have not been reported. Here we expressed the G827R-matriptase mutant in bacterial cells and found that it did not undergo autocatalytic cleavage from its zymogen to its active form as did the wild-type matriptase. Enzymatic activity measurements showed that the G827R mutant was catalytically inactive. When expressed in HEK293 cells, G827R-matriptase remained inactive but was shed as a soluble form, suggesting that another protease cleaved the full-length mature form of matriptase. Molecular modeling based on the crystal structure of matriptase showed that replacing Gly(827) by Arg blocks access to the binding/catalytic cleft of the enzyme thereby preventing autocatalysis of the zymogen form. Our study, thus, provides direct evidence that the G827R mutation in patients with autosomal recessive ichthyosis with hypotrichosis leads to the expression of an inactive protease.