IRAP is a membrane aminopeptidase and is homologous to the placental leucine aminopeptidase P-LAP. IRAP has a wide distribution, but has been best characterized in adipocytes and myocytes. In these cells, IRAP colocalizes with the glucose transporter GLUT4 to intracellular vesicles and, like GLUT4, translocates from these vesicles to the cell surface in response to insulin. Earlier studies demonstrated that purified IRAP cleaves several peptide hormones and that, concomitant with the appearance of IRAP at the surface of insulin-stimulated adipocytes, aminopeptidase activity toward extracellular substrates increases. In the current study, to identify in vivo substrates for IRAP, we tested potential substrates for cleavage by IRAP-deficient (IRAP -/-) and control mice. We found that vasopressin and oxytocin were not processed from the N-terminus by isolated IRAP -/- adipocytes and skeletal muscles. Vasopressin was not cleaved from the N-terminus after injection into IRAP -/- mice and exhibited a three-fold increased half-life in the circulation of IRAP -/- mice. Consistent with this finding endogenous plasma vasopressin levels were elevated two-fold in IRAP -/- mice and vasopressin levels in IRAP -/- brains, where plasma vasopressin originates, showed a compensatory decrease. We further established that insulin increased the clearance of vasopressin from control, but not from IRAP -/- mice. In conclusion, we have identified vasopressin as the first physiological substrate for IRAP. Changes in plasma and brain vasopressin levels in IRAP -/- mice suggest a significant role for IRAP in regulating vasopressin. We have also uncovered a novel, IRAP-dependent, insulin effect; to acutely modify vasopressin.