An enzyme, tentatively called peptidyl-D-amino acid hydrolase, has been purified from digestive juice from cecum intestine of Loligo vulgaris. The enzyme hydrolyzes peptides that have a low number of D- or L-amino acids. Proteins, polypeptides, and amino acid derivatives are not hydrolyzed. The enzyme acts as a carboxypeptidase with specificity toward small peptides. Polyacrylamide gel electrophoresis, polyacrylamide gel isoelectric focusing, and gel filtration showed the enzyme to be homogeneous. The native enzyme has Mr = 140,000 and consists of two subunits of Mr = 106,000 and 36,000, respectively. The enzyme has an isoelectric point at pH 6.1. The extinction coefficient is 336,000 at 278 nm and the absorption spectrum reveals no chromophoric cofactors. The apparent Km values for Gly-D-Ala, Gly-L-Ala, L-Ala-D-Ala, L-Ala-L-Ala, D-Leu-D-Leu, and L-Leu-L-Leu are 5.2, 7.7, 2.5, 2.8, 5.4, and 8.6 mM, respectively. The enzyme also hydrolyzes Leu-enkephalin, Met-enkephalin, and [D-Ala2] X Met-enkephalin. It has a broad pH optimum from 7.2 to 8.8 with a maximum at pH 8.0. The enzyme activity is not inhibited or increased by Co2+, Mn2+, Mg2+, Zn2+, Cu2+, and Ca2+ at a concentration of 1 mM or by guanidine chloride (50 mM)urea (3 M), and EDTA (50 mM). 50 mM CaCl2, 1 mM CdCl2, and 1 mM Pb(CH3COO)2 inhibited the enzyme activity by 5-10%. Amino acid analysis of the purified enzyme revealed an abundance of aspartic acid, glutamic acid, glycine, and valine. We hypothesize that the enzyme described here serves to hydrolyze D-amino acid peptides, which are probably present in the nervous system of cephalopods.