Nematophagous fungi have been used as biological control agents against nematodes parasitic to plants and animals. These fungi can secret subtilisin-like extracellular serine proteases during the infection of nematodes. The expression of these subtilisin-like serine proteases is regulated by nitrogen sources, including nematode cuticle. However, the mechanisms underlying the nitrogen sources-induced expression of these serine proteases is not well understood. In this study, we investigated the effect of nitrogen sources on the expression of a subtilisin-like extracellular protease, prC, in the nematophagous fungus Clonostachys rosea. Disruption of prC attenuated infection of the fungus to nematodes, indicating that this gene functions as a virulence factor. The inhibition of basal expression of prC by the preferred nitrogen sources (glutamine, ammonia) occurred at the transcriptional level. In contrast, nematode cuticle induced the expression of prC at the post-transcriptional level. The inducible expression of prC by nematode cuticle was significantly suppressed by glutamine, ammonia and phenylmethylsulfonyl fluoride (an inhibitor of serine protease). Thus, the existence of active PrC, albeit at a low level in the medium, is probably essential for further induction of this gene by nematode cuticle. Moreover, the low molecule weight (< 3 kD) degradation products of nematode cuticle could significantly induce the expression of prC. Ammonia suppresses the virulence of C. rosea against nematodes, probably by inhibiting prC expression. Thus, the nematophagous fungi probably could not function well as biocontrol agents in fields fertilized with a large amount of ammonium salt.