The rate of the insulin-degrading enzyme (IDE)-catalyzed hydrolysis of the fluorogenic substrate 2-aminobenzoyl-GGFLRKHGQ-ethylenediamine-2,4-dinitrophenyl is increased 2-7-fold by other peptide substrates but not by peptide non-substrates. This increased rate is attributed to a decrease in Km with little effect on Vmax. An approximately 2.5-fold increase in the rate of amyloid beta peptide hydrolysis is produced by dynorphin B-9. However, with insulin as substrate, dynorphin B-9 is inhibitory. Immunoprecipitation of differentially tagged IDE and gel filtration analysis were used to show that IDE exists as a mixture of dimers and tetramers. The equilibrium between dimer and tetramer is concentration-dependent, with the dimer the more active form. Bradykinin shifted the equilibrium toward dimer. Activation of substrate hydrolysis is not seen with a mixed dimer of IDE containing one active subunit and one subunit that is catalytically inactive and deficient in substrate binding. On the other hand, a mixed dimer containing one active subunit and one subunit that is catalytically inactive but binds substrate with normal affinity is activated by peptides. These findings suggest that peptides bind to one subunit of IDE and induce a conformational change that shifts the equilibrium to the more active dimer as well as activates the adjacent subunit. The selective activation of IDE toward amyloid beta peptide relative to insulin suggests the potential for development of compounds that increase IDE activity toward amyloid beta peptide as a therapeutic intervention for the treatment of Alzheimer's disease.