GSH metabolism in yeast is carried out by the ␥-glutamyl cycle as well as by the DUG complex. One of the last steps in the ␥-glutamyl cycle is the cleavage of Cys-Gly by a peptidase to the constitutent amino acids. Saccharomyces cerevisiae extracts carry Cys-Gly dipeptidase activity, but the corresponding gene has not yet been identified. We describe the isolation and characterization of a novel Cys-Gly dipeptidase, encoded by the DUG1 gene. Dug1p had previously been identified as part of the Dug1p-Dug2p-Dug3p complex that operates as an alternate GSH degradation pathway and has also been suggested to function as a possible di-or tripeptidase based on genetic studies. We show here that Dug1p is a homodimer that can also function in a Dug2-Dug3-independent manner as a dipeptidase with high specificity for Cys-Gly and no activity toward tri-or tetrapeptides in vitro. This activity requires zinc or manganese ions. Yeast cells lacking Dug1p (dug1⌬) accumulate Cys-Gly. Unlike all other Cys-Gly peptidases, which are members of the metallopeptidase M17, M19, or M1 families, Dug1p is the first to belong to the M20A family. We also show that the Dug1p Schizosaccharomyces pombe orthologue functions as the exclusive Cys-Gly peptidase in this organism. The human orthologue CNDP2 also displays Cys-Gly peptidase activity, as seen by complementation of the dug1⌬ mutant and by biochemical characterization, which revealed a high substrate specificity and affinity for Cys-Gly. The results indicate that the Dug1p family represents a novel class of Cys-Gly dipeptidases.GSH is a thiol-containing tripeptide (L-␥-glutamyl-L-cysteinyl-glycine) present in almost all eukaryotes (barring a few protozoa) and in a few prokaryotes (1). In the cell, glutathione exists in reduced (GSH) and oxidized (GSSG) forms. Its abundance (in the millimolar range), a relatively low redox potential (Ϫ240 mV), and a high stability conferred by the unusual peptidase-resistant ␥-glutamyl bond are three of the properties endowing GSH with the attribute of an important cellular redox buffer. GSH also contributes to the scavenging of free radicals and peroxides, the chelation of heavy metals, such as cadmium, the detoxification of xenobiotics, the transport of amino acids, and the regulation of enzyme activities through glutathionylation and serves as a source of sulfur and nitrogen under starvation conditions (2, 3). GSH metabolism is carried out by the ␥-glutamyl cycle, which coordinates its biosynthesis, transport, and degradation. The six-step cycle is schematically depicted in Fig. 1 (2).In Saccharomyces cerevisiae, ␥-glutamyl cyclotransferase and 5-oxoprolinase activities have not been detected, which has led to the suggestion of the presence of an incomplete, truncated form of the ␥-glutamyl cycle (4) made of ␥-glutamyl transpeptidase (␥GT) 4 and Cys-Gly dipeptidase and only serving a GSH catabolic function. Although ␥GT and Cys-Gly dipeptidase activities were detected in S. cerevisiae cell extracts, only the ␥GT gene (ECM38) has been identified so far. Cy...