A dipeptidase gene (pepD) from an industrial Lactobacillus helveticus strain was isolated by colony hybridization. An open reading frame (ORF) of 1422 base pairs (bp) with a coding capacity for a 53.5-kDa protein (PepD) was identified. The ORF was preceded by a typical prokaryotic promoter region, and an inverted repeat structure with delta G of -51.0 kJ mol-1 was found downstream of the coding region. The deduced amino acid sequence of the 53.5-kDa protein revealed no marked homologies when compared to the data bases of EMBL and SWISS-PROT. The 5'end of the 1.6-kb pepD transcript was determined both by a conventional primer extension method and using an automated sequencer. pepD was found to be maximally expressed at late exponential growth. The pepD gene was cloned into an expression vector to over-produce PepD in Escherichia coli JM105. Purification of PepD to homogeneity was achieved using three chromatographic steps. PepD was able to hydrolyze a number of dipeptides with the exception of those containing a proline residue. Optimal PepD activity was observed at pH 6.0 and 55 degrees C. The enzyme was inhibited by p-hydroxymercuribenzoate and reactivated by dithiothreitol whereas ethylenediaminetetraacetate had no inhibitory effect on PepD. The enzymatic properties of PepD suggest that it represents a novel dipeptidase type among lactic acid bacteria.