The use of endogenous protoporphyrin IX generated after administration of 5-aminolaevulinic acid (ALA) has led to many applications in photodynamic therapy (PDT). However, the bioavailability of ALA is limited by its hydrophilic properties and limited cell uptake. A promising approach to optimize the efficacy of ALA-PDT is to deliver ALA in the form of prodrugs to mask its hydrophilic nature. The aim of this work was to evaluate the potential of two ALA dipeptide derivatives, N-acetyl terminated leucinyl-ALA methyl ester (Ac-Leu-ALA-Me) and phenylalanyl-ALA methyl ester (Ac-Phe-ALA-Me), for their use in PDT of cancer, by investigating the generation of protoporphyrin IX in an oncogenic cell line (PAM212-Ras), and in a subcutaneous tumor model. In our in vitro studies, both derivatives were more effective than ALA in PDT treatment, at inducing the same protoporphyrin IX levels but at 50-to 100-fold lower concentrations, with the phenylalanyl derivative being the most effective. The efficient release of ALA from Ac-Phe-ALA-Me appears to be consistent with the reported substrate and inhibitor preferences of acylpeptide hydrolase. In vivo studies revealed that topical application of the peptide prodrug Ac-Phe-ALA-Me gave greater selectivity than with ALA itself, and induced tumor photodamage, whereas systemic administration improved ALA-induced porphyrin generation in terms of equivalent doses administered, without induction of toxic effects. Our data support the possibility of using particularly Ac-Phe-ALA-Me both for topical treatment of basal cell carcinomas and for systemic administration. Further chemical fine-tuning of this prodrug template should yield additional compounds for enhanced ALA-PDT with potential for translation to the clinic. Mol Cancer Ther; 14(2); 440-51. Ó2014 AACR.