Catalyzes the removal of a penultimate prolyl residue from the N-termini of peptides, such as Leu-Pro-Ala (PubMed:25609706, PubMed:28476889). Also shows low activity towards peptides with Ala or Ser at the P1 position (PubMed:28476889). {ECO:0000269|PubMed:25609706, ECO:0000269|PubMed:28476889}. [Isoform 1]: Promotes TNFRSF1B-mediated phosphorylation of MAPK8/JNK1 and MAPK9/JNK2, suggesting a function as an adapter protein for TNFRSF1B; the effect is independent of XPNPEP3 peptidase activity. May inhibit apoptotic cell death induced via TNF-TNFRSF1B signaling. . This is the function of XPNPEP3 (X-prolyl aminopeptidase 3, ENSG00000196236).