An extracellular protease derived from the culture broth of a microorganism, a Streptomyces species, produced Boc-Pro-Pro and diproline from Boc-Pro-Pro-Pro-Pro. The enzyme was purified 726-fold, with a yield of 2.6%, by ammonium sulfate fractionation, ion-exchange chromatography, and gel filtration chromatography. The molecular weight of the enzyme was determined to be 65,000 by gel filtration and 70,000 by SDS-PAGE. The enzyme released a C-terminal dipeptide from peptide substrates having a C-terminal proline and a penultimate proline or alanine residue, but did not hydrolyze angiotensin I or bradykinin. When the enzyme hydrolyzed Leu-Pro-Pro-Pro-Pro-Pro, it produced Leu-Pro-Pro-Pro and Pro-Pro before producing Leu-Pro. The enzyme thus seems to be a kind of dipeptidyl carboxypeptidase, its substrate specificity being very different from that of the well known dipeptidyl carboxypeptidases [EC 3.4.15.1] such as the angiotensin-converting enzyme.