A membrane-bound enzyme which degrades substance P (an undecapeptide) has been purified from human brain. The properties of this enzyme suggest that it may be involved in the physiological inactivation of the peptide by neural tissues. Enzyme activity was extracted from a membrane fraction of human diencephalon with a non-ionic detergent, Brij 35, and activity was monitored by measuring the disappearance of added substance P using radioimmunoassay, bioassay or radiochemical assay. The enzyme was purified about 1000-fold by chromatography on DEAE-cellulose, hydroxyapatite and Sephadex gel filtration columns. To identify the cleavage sites in substance P, the peptide was incubated with the purified enzyme and the breakdown products were separated by reverse-phase high-performance liquid chromatography and identified by amino acid analysis. The results suggested that the enzyme preparation was functionally homogeneous and it cleaved substance P between Gln6-Phe7, Phe7-Phe8 and Phe8-Gly9, with no exopeptidase action. The enzyme had a pH optimum in the range 7--9 and was strongly inhibited by metal-chelating agents, but not affected by most other peptidase inhibitors; it can thus be classified as a neutral metallo-endopeptidase. The enzyme was thermolabile and had a molecular weight of 40 000--50 000 as estimated by gel filtration, density-gradient ultracentrifugation and sodium dodecylsulphate gel electrophoresis. The highly purified substance-P-degrading enzyme could be distinguished from previously described peptidases for which substance P is a substrate. An important feature was that substance P was the preferred substrate among various other neuropeptides tested.