Butyrate and its structural analogues have recently entered clinical trials as a potential drug for differentiation therapy of advanced prostate cancer. To better understand the molecular mechanism(s) involved in prostate cancer differentiation, we used mRNA differential display to identify the gene(s) induced by butyrate. We found that the androgen-independent prostate cancer cell line PC-3 undergoes terminal differentiation and apoptosis after treatment with sodium butyrate (NaBu). A novel cDNA designated carboxypeptidase A3 (CPA3), which was up-regulated in NaBu-treated PC-3 cells, was identified and characterized. This gene expresses a 2795-bp mRNA encoding a protein with an open reading frame of 421 amino acids. CPA3 has 37-63% amino acid identity with zinc CPs from different mammalian species. It also shares 27-43% amino acid similarity with zinc CPs from several nonmammalian species, including Escherichia coli, yeast, Caenorhabditis elegans, and Drosophila. The structural similarity between CPA3 and its closest homologues indicates that the putative CPA3 protein contains a 16-residue signal peptide sequence, a 95-residue NH2-terminal activation segment, and a 310-residue CP enzyme domain. The consistent induction of CPA3 by NaBu in several prostate cancer cell lines led us to investigate the signaling pathway involved in the induction of CPA3 mRNA. Trichostatin A, a potent and specific inhibitor of histone deacetylase, also induced CPA3 mRNA expression, suggesting that CPA3 gene induction is mediated by histone hyperacetylation. We demonstrated that CPA3 induction was a downstream effect of the treatment with butyrate or trichostatin A, but that the induction of p21(WAF1/CIP1) occurred immediately after these treatments. We also demonstrated that the induction of CPA3 mRNA by NaBu was inhibited by p21(WAF1/CIP1) antisense mRNA expression, indicating that p21 transactivation is required for the induction of CPA3 by NaBu. Our data demonstrate that the histone hyperacetylation signaling pathway is activated during NaBu-mediated differentiation of PC-3 cells, and the new gene, CPA3, is involved in this pathway.