The T-region of Ti plasmids expresses two genes (No. 1 and 2) in crown-gall cells which are essential for auxin effects. It has been shown that gene 2 (=IaaH) codes for an amidohydrolase which converts indole-3-acetamide into indole-3-acetic acid and which is functional in bacteria and in crown-gall cells (Schröder et al. (1984), Eur. J. Biochem. 138, 387-391). In this report we describe a quantitative assay for the enzyme and its application to analyze the properties of the enzyme as expressed in plant cells and in Escherichia coli. The enzyme requires no cofactors, and the temperature optimum (30-37°C), pH optimum (8.5-9.5), and Km (about 1 μM) were very similar in both systems. Besides indole-3-acetamide, the enzyme also hydrolyzed indole-3-acetonitrile, esters of indole-3-acetic acid with glucose and myo-inositol, a-naphthaleneacetamide, and phenylacetamide, indicating that it may have a general function in converting substances of low auxin activity into those with high auxin activity. The results are discussed in relation to the possible function of T-DNA gene 1 which cooperates with gene 2 in evoking auxin effects in crown-gall cells.