This paper proposes a method that discriminates signal peptide and predicts the cleavage site of the secretory proteins cleaved by the signal peptidase I. The preprocessing stage uses hydrophobicity scales of amino acids in order to predict the presence of signal sequence and the cleavage site. The preprocessing enhances the performance of the prediction method by eliminating the non-secretory proteins in the early stage of prediction. for the effective use of support vector machine for the signal sequence prediction, the biologically relevant distance between the amino acid sequences is defined by using the hydrophobicity and substitution matrix; the hydrophobicity can be used to Predict the location of amino acid in a cell and the substitution matrix represents the evolutionary relationships of amino acids. The proposed method showed 98.9% discrimination rates from signal sequences and 88% correct rate of the cleavage site prediction on Swiss-Prot release 50 protein database using the 5-fold-cross-validation. In the comparison tests, the proposed method has performed significantly better than other prediction methods.