atl is a gene encoding a bifunctional peptidoglycan hydrolase of Staphylococcus aureus. The gene product of atl is a 138 kDa protein that has an amidase domain and a glucosaminidase domain, and undergoes processing to generate two major peptidoglycan hydrolases, a 51 kDa glucosaminidase and a 62 kDa amidase in culture supernatant. An atl null mutant was isolated by allelic replacement and characterized. The mutant grew in clusters and sedimented when grown in broth culture. Analysis of peptidoglycan prepared from the wild type and the mutant revealed that there were no differences in muropeptide composition or in glycan chain length distribution. On the other hand, the atl mutation resulted in pleiotropic effects on cell surface nature. The mutant cells showed complete inhibition of metabolic turnover of cell wall peptidoglycan and revealed a rough outer cell wall surface. The mutation also decreased the amount of protein non‐covalently bound to the cell surface and altered the protein profile, but did not affect proteins covalently associated with the cell wall. Lysis of growing cells treated with otherwise lytic concentration of penicillin G was completely inhibited in the mutant, but that of non‐growing cells was not affected by the mutation. The atl mutation did not significantly affect the ability of S. aureus to provoke an acute infection when inoculated intraperitoneally in a mouse sepsis model. These results further support the supposition that atl gene products are involved in cell separation, cell wall turnover and penicillin‐induced lysis of the cells.