Human serum cleaves two dipeptides from the N-terminus of the neurohormone substance P. It has been suggested that this degrading activity is inherent to serum cholinesterase. We oppose this, because it turned out that highly purified serum cholinesterase contains traces of dipeptidyl peptidase IV, an enzyme known to attack the N-terminus of substance P. The peptidase is incompletely separated from cholinesterase during the procainamide-gel affinity chromatography as the last step of the usual purification procedure. Physostigmine completely inhibits the hydrolysis of butyrylthiocholine by such purified cholinesterase preparations, but not their substance P-degrading activity. Vice versa, epsilon-carbobenzoxy-lysylproline, an inhibitor of dipeptidyl peptidase IV, inhibits the peptidase activity of these preparations more than their esterase activity. After rechromatography on procainamide gel the peptidase is completely separated and the remaining cholinesterase has lost its substance P-degrading activity. We conclude that the N-terminal region of substance P is not degraded by cholinesterase but by the contaminating dipeptidyl peptidase IV, a different serine enzyme.