Purification procedure for dipeptidyl peptidase III (DPP III) from human erythrocytes cytosol, entailing separations on DEAE-cellulose, hydroxylapatite and Sephacryl S-200 column, which gave homogeneous preparation in 35% yield, is described. The enzyme was shown to be a monomeric acidic protein (Mr approximately 82,000, pI approximately 4.5-4.6), sensitive to freezing and temperatures above 40 degrees C. It was inhibited by metallo-chelators and sulphydryl reagents, the activity being restored by divalent cations and thiol compounds. Co2 and Zn2 at low concentrations activated the enzyme, most probably by binding at the same site. Co2 prevented DPP III inactivation by di(4-pyridyl)disulfide, indicating that it is a metallo-peptidase with essential SH-groups which might be near or at the binding site for the metal. Among various naphthylamides Arg-Arg-2-naphthylamide was the best substrate (Km = 7.7 microM, kcat = 28 s-1) of the enzyme. DPP III from human erythrocytes hydrolysed also tri- to decapeptides of different composition, provided they did not have proline at P1 or P'1 position. A hydrophobic residue at P'1 was preferred. Among substrates were angiotensins and Leu-enkephalin. The enzyme showed particularly high affinity for angiotensin III.