beta-O-linked N-acetylglucosamine (O-GlcNAc) is an abundant and dynamic post-translational modification implicated in protein regulation that appears to be functionally more similar to phosphorylation than to classical glycosylation. There are nucleocytoplasmic enzymes for the attachment and removal of O-GlcNAc. Here, we further characterize the recently cloned beta-N-acetylglucosaminidase, O-GlcNAcase. Both recombinant and purified endogenous O-GlcNAcase rapidly release free GlcNAc from O-GlcNAc-modified peptide substrates. The recombinant enzyme functions as a monomer and has kinetic parameters (K(m) = 1.1 mm for paranitrophenyl-GlcNAc, k(cat) = 1 s(-1)) that are similar to those of lysosomal hexosaminidases. The endogenous O-GlcNAcase appears to be in a complex with other proteins and is predominantly localized to the cytosol. Overexpression of the enzyme in living cells results in decreased O-GlcNAc modification of nucleocytoplasmic proteins. Finally, we show that the enzyme is a substrate for caspase-3 but, surprisingly, the cleavage has no effect on in vitro O-GlcNAcase activity. These studies support the identification of this protein as an O-GlcNAcase and identify important interactions and modifications that may regulate the enzyme and O-GlcNAc cycling.