Replacement cultures liberated 3,4-dichloroaniline (DCA) from 3,4-dichloropropionanilide (propanil). The kinetics of the conversion suggest a requirement for de novo enzyme synthesis, but the system was not influenced by chloramphenicol or puromycin. Enzyme activity was detected when acetanilide (Km = 0.195 mM) was used to replace propanil as substrate. Fungal acylamidase (E.C. 3.5.1., an aryl acylamine amidohydrolase) was concentrated by salt precipitation and characterized. The Fusarium solani acylamidase exhibited an optimum at pH 7.5 to 9.0 and was inactivated in 10 min at 50 C. The enzyme was not sensitive to methyl-carbamate or organophosphate insecticides, but the herbicide, Ramrod (N-isopropyl-2-chloroacetanilide), acted as a competitive inhibitor of acetanilide hydrolysis (Ki = 0.167 mM). Hydrolysis rates were decreased by various para substitutions of acetanilide. Chloro substitution in the acyl moiety of acetanilide also reduced the rate of hydrolysis. 3,4-Dichloroacetanilide was less susceptible to enzyme action than acetanilide, but 3,4-dichloropropionanilide was hydrolyzed much more rapidly than propionanilide. The fungal acylamidase was highly specific for N-acetylarylamines. It did not catalyze hydrolysis of formanilide, butyranilide, dicryl, Karsil, fenuron, monuron, or isopropyl-N-phenylcarbamate. It appears to differ from acylamidases that have been isolated from rice, rat liver, chick kidney, and Neurospora.