We report here the isolation of a novel enzyme from bovine neurointermediate pituitary which catalyzes the conversion of alpha-hydroxybenzoylglycine to benzamide. This enzyme, termed HGAD (alpha-hydroxyglycine amidating dealkylase), is a soluble protein with an apparent molecular mass of 45 kDa and no apparent cofactor requirement. Addition of HGAD to purified neurointermediate pituitary PAM (peptidylglycine alpha-amidating monooxygenase, EC 1.14.17.3) increases the rate of formation of amide products by an order of magnitude. Sequential additions of PAM and HGAD gave results consistent with PAM first catalyzing the formation of an intermediate that is subsequently, in a separate reaction, converted by HGAD to the final amide product. Experiments with olefinic inactivators demonstrate that HGAD is not required for turnover-dependent inactivation of PAM and, correspondingly, that HGAD activity is not affected by inactivators of PAM. As expected, HGAD has no effect on the rate of PAM-catalyzed sulfoxidation, where a reaction analogous to that occurring during amidation of glycine-extended substrates is not possible. On the basis of these results, we propose that peptide C-terminal amidation in neurointermediate pituitary is a two-step process, with PAM first catalyzing the conversion of a glycine-extended peptide to the alpha-hydroxyglycine derivative, which is in turn converted to the final amide product by HGAD.