Salmonella enterica serovar Typhimurium peptidase E (PepE) is an N-terminal Asp-specific dipeptidase. PepE is not inhibited by any of the classical peptidase inhibitors, and its amino acid sequence does not place it in any of the known peptidase structural classes. A comparison of the amino acid sequence of PepE with a number of related sequences has allowed us to define the amino acid residues that are strongly conserved in this family. To ensure the validity of this comparison, we have expressed one of the most distantly related relatives (Xenopus) in Escherichia coli and have shown that it is indeed an Asp-specific dipeptidase with properties very similar to those of serovar Typhimurium PepE. The sequence comparison suggests that PepE is a serine hydrolase. We have used site-directed mutagenesis to change all of the conserved Ser, His, and Asp residues and have found that Ser120, His157, and Asp135 are all required for activity. Conversion of Ser120 to Cys leads to severely reduced (10 4 -fold) but still detectable activity, and this activity but not that of the parent is inhibited by thiol reagents; these results confirm that this residue is likely to be the catalytic nucleophile. These results suggest that PepE is the prototype of a new family of serine peptidases. The phylogenetic distribution of the family is unusual, since representatives are found in eubacteria, an insect (Drosophila), and a vertebrate (Xenopus) but not in the Archaea or in any of the other eukaryotes for which genome sequences are available.Peptide-hydrolyzing enzymes are required for the complete degradation of proteins to free amino acids and for the utilization of peptides as nutrient sources. Salmonella enterica serovar Typhimurium contains at least 14 peptidases with various substrate specificities, ensuring that these two processes are carried out fully (12). Four of these peptidases (peptidases N, A, B, and D) have a broad substrate specificity, and previous studies have shown that a mutant lacking all four enzymes is unable to completely degrade intracellular proteins to free amino acids (19). These broad-specificity peptidases do not, however, hydrolyze all peptides equally well. For example, none of the four can hydrolyze X-Pro peptides (where X can be any amino acid). Specialized enzymes (peptidases P and Q) that specifically hydrolyze X-Pro peptides have evolved to carry out this function (11). Only one of the broad-specificity enzymes, peptidase B, is able to hydrolyze Asp-X peptides (Z. Mathew, T. M. Knox, and C. G. Miller, submitted for publication), and cells contain an additional enzyme, peptidase E, that is specific for Asp-X dipeptides (5).Peptidase E was first identified as an activity capable of hydrolyzing Asp-X peptides and was subsequently shown to have specificity for aspartyl dipeptides (5). It does not hydrolyze Glu-X, Asn-X, Gly-X, or any other nonaspartyl peptide that has been tested (5). Peptidase E requires a free N terminus and does not cleave N-blocked peptides. The only other Asp-X-specific peptidases ...