The N terminus of the replicase nonstructural protein 2 (nsp2) of porcine reproductive and respiratory syndrome virus (PRRSV) contains a putative cysteine protease domain (PL2). Previously, we demonstrated that deletion of either the PL2 core domain (amino acids [aa] 47 to 180) or the immediate downstream region (aa 181 to 323) is lethal to the virus. In this study, the PL2 domain was found to encode an active enzyme that mediates efficient processing of nsp2-3 in CHO cells. The PL2 protease possessed both trans- and cis-cleavage activities, which were distinguished by individual point mutations in the protease domain. The minimal size required to maintain these two enzymatic activities included nsp2 aa 47 to 240 (Tyr47 to Cys240) and aa 47 to 323 (Tyr 47 to Leu323), respectively. Introduction of targeted amino acid mutations in the protease domain confirmed the importance of the putative Cys55- His124 catalytic motif for nsp2/3 proteolysis in vitro, as were three additional conserved cysteine residues (Cys111, Cys142, and Cys147). The conserved aspartic acids (e.g., Asp89) were essential for the PL2 protease trans-cleavage activity. Reverse genetics revealed that the PL2 trans-cleavage activity played an important role in the PRRSV replication cycle in that mutations that impaired the PL2 protease trans function, but not the cis activity, were detrimental to viral viability. Lastly, the potential nsp2/3 cleavage site was probed. Mutations with the largest impact on in vitro cleavage were at or near the G1196\G1197 dipeptide.