The reactions of a set of amino acid and peptidyl C10-esters of deacetylcephalothin (1-5) have been examined with purified enzymes in vitro. Each of the compounds examined is a substrate for the Escherichia coli TEM-2 beta-lactamase, and enzyme-catalyzed hydrolysis of the lactam bond gives release of an amino acid or a peptidyl fragment from a cephem nucleus. 7 beta-(2-Thienylacetamido)-3-[[(beta-chloro-L-alanyl)oxy]methyl]-3- cephem-4-carboxylate (4) gives time-dependent inactivation of E. coli JSR-O alanine racemase in a process that requires beta-lactamase for the initial liberation of beta-chloro-L-alanine from the cephalosporin. Alanine racemase is similarly inactivated by 7 beta-(2-thienylacetamido)-3-[[[(beta-chloro-L-alanyl)-beta-chloro- L- alanyl]oxy]methyl]-3-cephem-4-carboxylate (1), but this inhibition requires the sequential action of both beta-lactamase and alanine aminopeptidase. Analysis of the enzymatic transformations of 7 beta-(2-thienylacetamido)-3-[[[(beta-chloro-L-alanyl)-L- alanyl]oxy]methyl]-3-cephem-4-carboxylate (3), monitored by high-field 1H NMR, reveals that (1) beta-lactamase releases the dipeptide beta-chloro-L-alanyl-L-alanine from 3 and (2) leucine aminopeptidase effects stoichiometric hydrolysis of the dipeptide to beta-chloro-L-alanine and L-alanine. These biochemical findings are discussed with reference to the mechanism of antibacterial action of 1 against beta-lactamase-producing, penicillin-resistant microorganisms [Mobashery, S., Lerner, S. A., & Johnston, M. (1986) J. Am. Chem. Soc. 108, 1685].