The Salmonella typhimurium pepE gene, encoding an N-terminal-Asp-specific dipeptidase, has been cloned on pBR328 by complementation of the Asp-Pro growth defect conferred by a pepE mutation. Strains carrying the complementing plasmids greatly overproduce peptidase E. The enzyme has been purified from an extract of such a strain, its N-terminal amino acid sequence has been determined, and crystals suitable for X-ray diffraction have been grown. A new assay using L-aspartic acid p-nitroanilide as a substrate has been used to determine the pH optimum (-7.5) and to test the elfect of potential inhibitors. Insertions of transposon y8 (TnlOOO) into one of the plasmids have been used to localize the gene and as sites for priming sequencing reactions. The nucleotide sequence of a 1,088-bp region of one of these plasmids has been determined. This sequence contains an open reading frame that predicts a 24.8-kDa protein with an N-terminal sequence that agrees with that determined for peptidase E. The predicted peptidase E amino acid sequence is not similar to that of any other known protein. The nucleotide sequence of the region upstream from pepE contains a promoter with a cyclic AMP receptor protein (CRP) site, and the effects of growth medium and of a crp mutation on expression of a pepE-lacZ fusion indicate that pepE is a member of the CRP regulon. The unique specificity of peptidase E and its lack of sequence similarity to any other peptidase suggest that this enzyme may be the prototype of a new class of peptidases. Its regulation by CRP and its specificity suggest that the enzyme may play a role in allowing the cell to use peptide aspartate to spare carbon otherwise required for the synthesis of the aspartate family of amino acids.