Proteases play important roles in the virulence of Pseudomonas aeruginosa. Some are exported to act on host targets and facilitate tissue destruction and bacterial dissemination. Others work within the bacterial cell to process virulence factors and regulate virulence gene expression. Relatively little is known about the role of one class of bacterial serine proteases known as the carboxyl-terminal processing proteases (CTPs). The P. aeruginosa genome encodes two CTPs annotated as PA3257/Prc and PA5134/CtpA in strain PAO1. Prc degrades mutant forms of the anti-sigma factor MucA to promote mucoidy in some cystic fibrosis lung isolates. However, nothing is known about the role or importance of CtpA. We have now found that endogenous CtpA is a soluble periplasmic protein and that a ctpA null mutant has specific phenotypes consistent with an altered cell envelope. Although a ctpA null mutation has no major effect on bacterial growth in the laboratory, CtpA is essential for the normal function of the type 3 secretion system (T3SS), for cytotoxicity toward host cells, and for virulence in a mouse model of acute pneumonia. Conversely, increasing the amount of CtpA above its endogenous level induces an uncharacterized extracytoplasmic function sigma factor regulon, an event that has been reported to attenuate P. aeruginosa in a rat model of chronic lung infection. Therefore, a normal level of CtpA activity is critical for T3SS function and acute virulence, whereas too much activity can trigger an apparent stress response that is detrimental to chronic virulence.