Dipeptidyl carboxypeptidase is a C-terminal exopeptidase of Escherichia coli. We have isolated the respective gene, dcp, from a low-copy-number plasmid library by its ability to complement a dcp mutation preventing the utilization of the unique substrate N-benzoyl-L-glycyl-L-histidyl-L-leucine. Sequence analysis of a 2.9-kb DNA fragment revealed an open reading frame of 2,043 nucleotides which was assigned to the dcp gene by N-terminal amino acid sequencing and electrophoretic molecular mass determination of the purified dcp product. Transcript mapping by primer extension and S1 protection experiments verified the physiological significance of potential initiation and termination signals for dcp transcription and allowed the identification of a single species of monocistronic dcp mRNA. The codon usage pattern and the effects of elevated gene copy number indicated a relatively low level of dcp expression. The predicted amino acid sequence of dipeptidyl carboxypeptidase, containing a potential zinc-binding site, is highly homologous (78.8%) to the corresponding enzyme from Salmonella typhimurium. It also displays significant homology to the products of the S. typhimurium opdA and the E. coli prlC genes and to some metalloproteases from rats and Saccharomyces cerevisiae. No potential export signals could be inferred from the amino acid sequence. Dipeptidyl carboxypeptidase was enriched 80-fold from crude extracts of E. coli and used to investigate some of its biochemical and biophysical properties.