M24B peptidases cleaving Xaa‐Pro bond in dipeptides are prolidases whereas those cleaving this bond in longer peptides are aminopeptidases‐P. Bacteria have small aminopeptidases‐P (36‐39 kDa), which are diverged from canonical aminopeptidase‐P of Escherichia coli (50 kDa). Structure‐function studies of small aminopeptidases‐P are lacking. We report crystal structures of small aminopeptidases‐P from E. coli and Deinococcus radiodurans, and report substrate‐specificities of these proteins and their ortholog from Mycobacterium tuberculosis. These are aminopeptidases‐P, structurally close to small prolidases except for absence of dipeptide‐selectivity loop. We noticed absence of this loop and conserved arginine in canonical archaeal prolidase (Maher et al., Biochemistry. 43, 2004, 2771‐2783) and questioned its classification. Our enzymatic assays show that this enzyme is an aminopeptidase‐P. Further, our mutagenesis studies illuminate importance of DXRY sequence motif in bacterial small aminopeptidases‐P and suggest common evolutionary origin with human XPNPEP1/XPNPEP2. Our analyses reveal sequence/structural features distinguishing small aminopeptidases‐P from other M24B peptidases.