In the present study, we characterized the gene product of open reading frame 3 encoded at human chromosome 20 (C20orf3), which represents a member of the lactonohydrolase super family. Multiple-tissue Northern blot analysis showed ubiquitous expression of the 2.4 kb transcript coding for 416 amino acids, with highest levels in human liver, placenta and kidney. After recombinant production of protein variants in Escherichia coli and insect cells, antibodies directed against different epitopes within the C20orf3 gene product were generated. Using these immunoreagents, protein expression was demonstrated in the liver, and glomerular and tubular structures of the kidney, as well as in endothelial cells and arterial wall. Positive staining was also observed at the pancreatic islets of Langerhans. Using immunoblotting, we identified three size variants. In line with the results of in silico analysis demonstrating a single transmembrane sequence (amino acids 40-61) at the N-terminus of the full-length protein, FACS cell-surface staining confirmed a mainly extracellular localization of the full-length protein. Sucrose density gradient cell fractionation revealed membrane association of the dominant 50 kDa variant in HepG2 and Rin-5F cells. The finding of a strong arylesterase activity with beta-naphthyl acetate and phenyl acetate of the C20orf3 protein-containing fractions suggests potential involvement of this protein in enzymatic processes. C20orf3 promoter-driven reporter assays, which were verified by gene-specific RT-qPCR (real-time quantitative PCR) showed a strong inhibitory effect of human serum on transcription using the HEK-293 human embryonic kidney cell line. In conclusion, we characterized the structure and expression pattern of the C20orf3 gene product. According to a series of analogies with PON (paraoxonase) family members, we speculate that the C20orf3 gene product represents a new member of this important protein family present at the cellular level.