Acylpeptide hydrolase is shown to catalyse the specific addition of a single amino acid to the N-terminus of a peptide. The stabilised Sepharose-coupled form of the enzyme is used to couple a carboxy-methylated N-formyl (or N-acetyl) amino acid to a short pre-existing peptide. The yield is improved by optimal timing of the reaction and the presence of moderate concentrations (5%) of N,N-dimethylformamide. Two tripeptides, Ac-Ala-Ala-Ala and fMet-Leu-Phe (f, formyl) were synthesized by this technique (in yields of 2% and 0.064% respectively). The products were characterised by HPLC, amino acid analysis, mass spectroscopy and protein sequencing. The synthetic fMet-Leu-Phe also had biological activity, in that it stimulated superoxide generation by granulocytes. Acylpeptide hydrolase could therefore be a very useful tool for the synthesis and modification of peptides.