Airway surface liquid (ASL) absorption is initiated by Na+ entry via epithelial Na+ channels (ENaC), which establishes an osmotic gradient that drives fluid from the luminal to serosal airway surface. We and others have recently reported that a protease/anti-protease balance regulates ENaC in human airway epithelial cells (HAEC) and provides a mechanism for autoregulation of ASL volume. In cystic fibrosis (CF), this balance is disturbed, leading to constitutive proteolytic activation of ENaC and the pathological Na+ hyperabsorption characteristic of this airway disease. Prostasin is a glycosylphosphatidylinositol-anchored serine protease that activates ENaC and is expressed on the surface epithelium lining the airway. In this report we present evidence that prostasin expression is regulated by the ASL volume, allowing for increased proteolytic activation of ENaC when the ASL volume is high. Prostasin activity is further regulated by the cognate serpin protease nexin-1 (PN-1), which is expressed in HAEC and inhibits Na+ absorption by forming an inactive complex with prostasin and preventing the proteolytic processing of prostasin. Whereas these mechanisms regulate prostasin expression in response to ASL volume in non-CF epithelia, HAEC cultured from CF patients express >50% more prostasin on the epithelial surface. These findings suggest that a proteolytic cascade involving prostasin, an upstream prostasin-activating protease, and PN-1 regulate Na+ absorption in the airway and that abnormal prostasin expression contributes to excessive proteolytic activation of ENaC in CF patients.