Enterotoxigenic Bacteroides fragilis produces a secreted metalloprotease known as B. fragilis toxin (BFT), which contributes to anaerobic sepsis, colitis, and colonic malignancy in mouse models of disease. A C11 family cysteine protease, fragipain (Fpn), directly activates BFT in the B. fragilis cell by removing the BFT prodomain. Fpn is itself a proenzyme and is autoactivated upon cleavage at an arginine residue in its activation loop. We have defined the proteolytic active site of Fpn, demonstrated that Fpn autoactivation can occur by an in trans loop cleavage mechanism, and characterized structural features of the Fpn activation loop that control peptidase activity against several substrates, including BFT. An arginine residue at the autocleavage site determines the fast activation kinetics of Fpn relative to the homologous C11 protease, PmC11, which is cleaved at lysine. Arginine to alanine substitution at the cleavage site ablated peptidase activity, as did partial truncation of the Fpn activation loop. However, complete truncation of the activation loop yielded an uncleaved, pro form of Fpn that was active as a peptidase against both Fpn and BFT substrates. Thus, Fpn can be transformed into an active peptidase in the absence of activation loop cleavage. This study provides insight into the mechanism of fragipain activation and, more generally, defines the role of the C11 activation loop in the control of peptidase activity and substrate specificity.