Cystatin C is an inhibitor of lysosomal cysteine proteases and consists of 120 amino acids. A variant of cystatin C lacking the first NH2- terminal residues and having one amino acid substitution at position 68 forms amyloid deposits mainly in the walls of brain arteries, causing fatal strokes in Icelandic patients with familial cerebral hemorrhage secondary to a form of an autosomal dominant amyloidosis. To understand the molecular basis of the genetic defect, the gene encoding cystatin C was isolated from genomic DNA libraries made from normal tissue and the brain of an Icelandic patient with hereditary cerebral hemorrhage with amyloidosis (HCHWA-I). The data indicate that the cystatin C gene encodes a polypeptide of 146 amino acids, of which the first 26 correspond to a secretory peptide signal sequence. The gene contains two intervening sequences that interrupt the coding region at amino acids 55 and 93. Comparison with genes encoding salivary cystatins and kininogen proteins show sequence homology and conservation of exon- intron structure. Except for a mutation in the second exon (CAG instead of CTG in the normal gene, resulting in the substitution of glutamine for a leucine residue), the gene cloned from the brain of the Icelandic patient is identical to the normal cystatin C gene. Thus, HCHWA-I is the first familial type of amyloidosis related to a point mutation in a gene encoding for an inhibitor. The mutation in the structural gene encoding cystatin C appears to be the primary defect in this inherited disorder causing amyloid fibril formation and accumulation followed by cerebral hemorrhage.