Dcp from Escherichia coli is a 680 residue cytoplasmic peptidase, which shows a strict dipeptidyl carboxypeptidase activity. Although Dcp had been assigned to the angiotensin I-converting enzymes (ACE) due to blockage by typical ACE inhibitors, it is currently grouped into the M3 family of mono zinc peptidases, which also contains the endopeptidases neurolysin and thimet oligopeptidase (TOP). We have cloned, expressed, purified, and crystallized Dcp in the presence of an octapeptide "inhibitor", and have determined its 2.0A crystal structure using MAD methods. The analysis revealed that Dcp consists of two half shell-like subdomains, which enclose an almost closed two-chamber cavity. In this cavity, two dipeptide products presumably generated by Dcp cleavage of the octapeptide bind to the thermolysin-like active site fixed to side-chains, which are provided by both subdomains. In particular, an Arg side-chain backed by a Glu residue, together with two Tyr phenolic groups provide a charged anchor for fixing the C-terminal carboxylate group of the P2' residue of a bound substrate, explaining the strict dipeptidyl carboxypeptidase specificity of Dcp. Tetrapeptidic substrates are fixed only via their main-chain functions from P2 to P2', suggesting a broad residue specificity for Dcp. Both subdomains exhibit very similar chain folds as the equivalent but abducted subdomains of neurolysin and TOP. Therefore, this "product-bound" Dcp structure seems to represent the inhibitor/substrate-bound "closed" form of the M3 peptidases, generated from the free "open" substrate-accessible form by a hinge-bending mechanism. A similar mechanism has recently been demonstrated experimentally for ACE2.