Sheep lung dipeptidase was released from a lung membrane preparation by digestion with phosphatidylinositol-specific phospholipase C from Bacillus thuringiensis. The total enzyme activity released into the supernatant was 4- to 5-fold greater than that measured in the intact membrane prior to solubilization. The release of the peptidase from the membrane by this treatment is typical of proteins anchored to the lipid bilayer by a covalent attachment of phosphatidylinositol via a C-terminal glycolipid extension. The solubilized lung peptidase was further purified by ammonium sulfate fractionation followed by affinity chromatography and high-pressure liquid chromatography. A linear relationship between log molecular weight and elution volume for proteins of known molecular weight was established using a Toya Soda TSK 3000 high-pressure liquid chromatography column, and the molecular weight of the lung dipeptidase was estimated at 105,000. The peptidase activity against glycyldehydrophenylalanine of the purified enzyme co-chromatographed in high-pressure liquid chromatography with the activity that converted leukotriene D4 to leukotriene E4. In kinetic studies using leukotriene D4 as substrate, the relationship between the rate of hydrolysis and enzyme concentration was shown to be linear over the range 20 ng to 98 ng enzyme. Values of Km and Vmax for the dipeptidase using leukotriene D4 as substrate were 43 +/- 6 microM and 11,200 +/- 400 nmol/min per mg, respectively. Inhibition of the conversion of leukotriene D4 to leukotriene E4 was observed with a series of inhibitory agents. Cilastatin, bestatin and chloracetyldehydrophenylalanine were all effective at the micromolar level with cilastatin proving to be the most effective inhibitor. Dithiothreitol was effective within the millimolar range.