Metallocarboxypeptidases play critical roles in the development of mosquitoes and influence pathogen/parasite infection of the mosquito midgut. Here, we report the crystal structure of procarboxypeptidase B1 (PCPBAe1), characterized its substrate specificity and mechanism of binding to and inhibiting Dengue virus (DENV). We show that the activated PCPBAe1 (CPBAe1) hydrolyzes both Arg- and Lys-substrates, which is modulated by residues Asp and Ser Notably, these residues are conserved in CPBs across mosquito species, possibly required for efficient digestion of basic dietary residues that are necessary for mosquito reproduction and development. Importantly, we characterized the interaction between PCPBAe1 and DENV envelope (E) protein, virus-like particles, and infectious virions. We identified residues Asp, Glu, Glu, Arg, and Arg of PCPBAe1 are essential for interaction with DENV. PCPBAe1 maps to the dimeric interface of the E protein domains I/II (Lys-Glu, Val-Val, and Leu-Leu). Overall, our studies provide general insights into how the substrate-binding property of mosquito carboxypeptidases could be targeted to potentially control mosquito populations or proposes a mechanism by which PCPBAe1 binds to and inhibits DENV.