Dipeptide synthesis by aminopeptidase from Streptomyces septatus TH-2 (SSAP) was demonstrated using free amino acid as an acyl donor and aminoacyl methyl ester as an acyl acceptor in 98% methanol (MeOH). SSAP retained its activity after more than 100 h in 98% MeOH, and in the case of phenylalanyl-phenylalanine methyl ester synthesis, the enzyme reaction reached equilibrium when more than 50% of the free phenylalanine was converted to the product. In an investigation of the specificity of SSAP toward acyl donors and acyl acceptors, SSAP showed a broad specificity toward various free amino acids and aminoacyl methyl esters. Furthermore, we applied SSAP to the synthesis of several biologically active peptides, such as aspartyl-phenylalanine, alanyl-tyrosine, and valyl-tyrosine methyl esters.Some dipeptides exhibit biological activity; for example, aspartyl-phenylalanine methyl ester (AspPhe-OMe) is a highintensity sweetener, tyrosyl-arginine (TyrArg) is an opioid dipeptide (31), and valyl-tyrosine (ValTyr) inhibits an angiotensin I-converting enzyme's activity (35). In addition, some amino acids, such as tyrosine (Tyr), which is considered as an essential amino acid for some premature infants, have a low solubility. Because these immiscible amino acids become soluble by ligation to another amino acid, alanyl-tyrosine (AlaTyr) is a potential source of tyrosine (10, 11).Several metallopeptidases, such as thermolysin, synthesize peptides in organic solvents (6,20,24). Thermolysin prefers chemically N-protected peptides as substrates for hydrolysis, and therefore N-protected amino acids are used as acyl donors in dipeptide synthesis by thermolysin. Hence, deprotection is required to obtain a biologically active dipeptide. In addition, chemically N-protected amino acids are more expensive than free amino acids and their esters. Thus, from an economical point of view, N-protected amino acids are undesirable for use in the chemoenzymatic synthesis of biologically active dipeptides. Recently, Yokozeki and Hara have reported an efficient enzymatic method involving the aminolysis of ester bonds using a free amino acid and aminoacyl-OMe (38). This method is more cost-effective than the method using thermolysin and has the advantage of using an aqueous solution. Besides the method of Yokozeki and Hara, numerous methods using other enzymes, such as aminoacyl-tRNA synthetase (19), D-alanine ligase (26), and nonribosomal peptide synthetases (14), have been developed. However, these enzymes are too expensive to be applied in the food and pharmaceutical industries. In addition, some biologically active dipeptides, such as TyrArg, AlaTyr, and ValTyr, cannot be synthesized by any of these methods. Thus, the development of a novel method for enzymatic peptide synthesis is crucial for the application of these biologically active dipeptides in the food and pharmaceutical industries.Recently, we have identified a thermostable aminopeptidase (AP) that contains cocatalytic metallo-active sites and is secreted by Streptomyces septatus TH-2 ...