gamma-Glutamyl transpeptidase (gamma-GT), an enzyme possibly involved in amino acid transport, was investigated in rat small intestine using the synthetic substrate L-gamma-glutamyl-p-nitroanilide. Enzyme localization and characteristics were correlated with features of amino acid uptake. gamma-GT activity copurified with sucrase and alkaline phosphatase. Activity was maximal at pH 8.2 and was stimulated by monovalent cations. The relative specificity of the gamma-GT reaction with diglycine and eight essential amino acids as substrates correlated well with the rate of intestinal absorption of this dipeptide and these amino acids as observed by others. gamma-GT activity was 12-fold greater in the jejunum than in the ileum, again in agreement with relative rates of amino acid absorption along the length of rat intestine. The specific activity of gamma-GT in villus tip cells was 10 times greater than in crypt cells, and amino acid uptake was 2 to 6 times greater with villus tip than with crypt cells. Bromosulfophthalein, a noncompetitive inhibitor of gamma-GT, inhibited amino acid uptake. These studies support the concept that membrane gamma-GT may be involved in amino acid and dipeptide uptake, and indicate that further investigation of such involvement may be conveniently pursued using mammalian small bowel.