A new type of dipeptidyl aminopeptidase, which releases basic aminoacyl dipeptides from the NH2-terminal end of oligopeptides, was purified about 2100-fold with 6.8% recovery from rat brain membranes by column chromatography on Cellex D, Arg-Tyr-AH-Sepharose 4B, hydroxylapatite, and Sephadex G-75, after the membranes were solubilized with Nonidet P-40. Activity was assayed by high performance liquid chromatography (HPLC) using Arg0-Met5-enkephalin (Arg0-enk)* as substrate in the presence of bestatin, thiorphan, and captopril. In sodium dodecyl sulfate-polyacrylamide gel electrophoresis, the purified enzyme is apparently homogeneous with a mass of 64,000 daltons. This thiol enzyme is optimally active at pH 7 and is selectively activated by Mn(II). It loses 94% of its activity after EDTA treatment and can be reactivated by Mn(II), Co(II), and Zn(II). It splits Arg0-enk into equimolar amounts of Arg-Tyr and Gly-Gly-Phe-Met with a Km of 100 microM, and Vmax of 3.8 mumol/mg of protein/min. Dipeptidyl aminopeptidase does not hydrolyze model substrates for dipeptidyl aminopeptidases I, II, III, and IV, aminoacyl beta-naphthylamides, actin, desmin, tubulin, glial fibrillary acidic protein, and cytoskeletal neurofilament proteins. The enzyme is insensitive to puromycin, but is inhibited by several neuropeptides. Angiotensin III is the most potent with a Ki of 0.3 microM. Substrate specificity, pH optimum, molecular weight, activators, and catalytic site demonstrate that this enzyme is distinct from dipeptidyl aminopeptidases previously described.