Leukotriene-A4 hydrolase (EC 3.3.2.6) cleaved the NH2-terminal amino acid from several tripeptides, typified by arginyl-glycyl-aspartic acid, arginyl-glycyl-glycine, and arginyl-histidyl-phenylalanine, with catalytic efficiencies (kcat/Km) > or = 1 x 10(6) M-1 s-1. This exceeds by 10-fold the kcat/Km for its lipid substrate leukotriene A4. Catalytic efficiency declined for dipeptides which had kcat/Km ratios 10-100-fold lower than tripeptides. Tetrapeptides and pentapeptides were even poorer substrates with catalytic efficiencies below 10(3) M-1 s-1. The enzyme preferentially hydrolyzed tripeptide substrates and single amino acid p-nitroanilides with L-arginine at the NH2 terminus. Peptides with proline at the second position were not hydrolyzed, suggesting a requirement for an N-hydrogen at the peptide bond cleaved. Peptides with a blocked NH2 terminus were not hydrolyzed. The specificity constant (kcat/Km) was optimal at pH 7.2 with pK values at 6.8 and 7.9; binding was maximal at pH 8.0. Serum albumins activated the peptidase, increasing tripeptide affinities (Km) by 3-10-fold and specificities (kcat/Km) by 4-13-fold. Two known inhibitors of arginine peptidases, arphamenine A and B, inhibited hydrolysis of L-arginine p-nitroanilide with dissociation constants = 2.0 and 2.5 microM, respectively. Although the primary role of LTA4 hydrolase is widely regarded as the conversion of the lipid substrate leukotriene A4 into the inflammatory lipid mediator leukotriene B4, our data are the first showing that tripeptides are "better" substrates. This is compatible with a biological role for the peptidase activity of the enzyme and may be relevant to the distribution of the enzyme in organs like the ileum, liver, lung, and brain. We present a model which accommodates the available data on the interaction of substrates and inhibitors with the enzyme. This model can account for overlap in the active site for hydrolysis of leukotriene A4 and peptide or p-nitroanilide substrates.