Pediococcus acidilactici is a probiotic lactic acid bacteria possessing studied in-vitro probiotic properties. Study of membrane proteins is crucial in developing technological and health applications of probiotic bacteria. Genome analysis of Pediococcus acidilactici revealed about more than 60 proteases/peptidases which need characterization. Dipeptidyl peptidase-III (DPP-III) is studied for first time in prokaryotes and it is a membrane protein in P. acidilactici that has been purified to apparent homogeneity. The enzyme was purified 81.66 fold with 36.75% yield. The specific activity of purified DPP-III was 202.67 U/mg. The protein moved as single band on native PAGE. The purity was also confirmed by in-situ gel assay. However SDS-PAGE analysis revealed it as high molecular weight heterotetramer with molecular weight of 108 kDa. The enzyme was maximally active at pH 8.5 and at 37 C. Purified DPP-III specifically hydrolyzed Arg-Arg-4-βNA with micromolar affinity (K = 9.0 µM) and none of studied endopeptidase and monopeptidase substrate was hydrolyzed. Inhibition study revealed purified DPP-III to be a serine protease with involvement of metal ion at active site. The significance of this enzyme as membrane protein is yet to be studied.