Peptide hormone inactivating endopeptidase (PHIE) is a metalloendopeptidase which was isolated from the skin granular gland secretions of Xenopus laevis [Carvalho, K. M., Joudiou, C., Boussetta, H., Leseney, A. M., & Cohen, P. (1992) Proc. Natl. Acad. Sci. U.S.A. 89, 84-88]. This peptidase exhibits a thermolysin-like character and hydrolyzes bonds on the amino terminus of hydrophobic amino acids, performing cleavage of Xaa-Phe, Xaa-Leu, Xaa-Ile, Xaa-Tyr, and Xaa-Trp doublets. When the enzyme recognized a doublet of hydrophobic amino acids such as Phe6-Phe7 of somatostatin-14, Phe7-Phe8 of substance P, Phe4-Leu5 of [Leu5,Arg6]enkephalin, and Tyr4-Ile5 of angiotensin II, cleavage occurred preferentially between these residues. The use of selectively modified carboxy-terminal octapeptide fragments of atrial natriuretic factor (ANF) indicated that the enzyme tolerates as substrates only peptides bearing a P'1 bulky hydrophobic amino acid residue. Although a P'1 hydrophobic residue was a necessary condition, it was found in a number of peptides that all potential cleavage sites were not recognized by the enzyme. These data suggested that this metalloendoprotease requires for its thermolysin-like activity a preferred conformation of the peptide chain. Kinetic results obtained using a series of related substrates derived from biologically active peptides of the atrial natriuretic factor, tachykinin, and enkephalin families indicated the presence of an extended binding site accommodating at least six amino acid residues, in contrast to thermolysin (EC 3.4.24.4) and neutral endopeptidase (NEP; EC 3.4.24.11), which hydrolyze shorter homologous peptides.(ABSTRACT TRUNCATED AT 250 WORDS)