In the periplasmic space of Escherichia coli, the (L)-m-A2pm-(D)-m-A2pm peptide, the lipoprotein, and the AmpC beta-lactamase are controlled by growth rate. To explain this coordinate regulation, it is proposed that the AmpC protein functions as an LD-endopeptidase in addition to its known function as a beta-lactamase. As LD-peptides, DD-peptides and beta-lactams are structurally similar, LD-peptidases may belong to the larger family of DD-peptidases and serine beta-lactamases. In contrast to E. coli, many related bacteria possess an inducible AmpC protein. Several gene systems necessary for AmpC induction are known to affect various aspects of peptidoglycan metabolism. It is proposed that AmpC induction occurs indirectly via a recyclable cell wall peptide.