The ability of auxotrophs of Neurospora crassa to grow on certain tripeptides, despite the presence of excess competing amino acids, suggests it has an oligopeptide transport system. In general, dipeptides did not support growth except in those instances where extracellular hydrolysis occurred, or where the dipeptide appeared to be accumulated by an uptake system which is sensitive to inhibition by free amino acids. Considerable intracellular peptidase activity toward a large number of peptides was demonstrated, including a number of peptides which could not be utilized for growth. The intracellular peptidase activity was shown to be selective for amino acid composition and sequence (N-terminal or C-terminal) within the peptide; glycine-containing peptides were particularly poor substrates for peptidase activity. Only a small amount of extracellular peptidase activity could be detected.