Neprilysin is a peptidase which has a specificity directed toward cleavage on the amino side of hydrophobic residues. In addition an active site arginine on the enzyme can interact with the C-terminal carboxylate of a substrate. The importance of the position of the hydrophobic residue relative to the C-terminus of the substrate has been investigated using a series of peptides containing one or two cleavage sites. With a hexapeptide series succ-(GLy)x-Phe-(Gly)y-OH, where x = 1 to 5 and y = 5 to 1 respectively, a approximately 25-fold increase in the specificity constant kcat/Km was observed when Phe was adjacent to the C-terminal Gly residue. With peptide-free acids containing two cleavable bonds (X and Y) of the type succ-Gly-X-Gly-Y-Gly-OH, cleavage was observed at the Y residue. However, when the two cleavable bonds were adjacent, succ-Gly-Gly-X-Y-Gly-OH, cleavage of a tripeptide was observed even when the residue in position X was one cleaved poorly when presented as the sole cleavage site. These results demonstrate a preference by the enzyme for the placement of a hydrophobic residue in the P'2 position.