The peptide amidase (Pam) from the gram-negative bacterium Stenotrophomonas maltophilia catalyzes predominantly the hydrolysis of the C-terminal amide bond in peptide amides. Its gene (pam) was isolated by Southern hybridization using a DNA probe derived from the known N-terminal amino acid sequence. Pam is a member of the amidase signature family and was identified as a periplasmic protein by an N-terminal signal peptide found in the gene. The processed protein consists of 503 amino acids with a molecular mass of 53.5 kDa. The recombinant enzyme with a C-terminal His(6) tag has a monomeric structure and its isoelectric point is 6.3. The dipeptide amide L-Ala-L-Phe-NH2 is hydrolyzed in the absence of cofactors to L-Ala-L-P e-OH and ammonia with V-max=194 U/mg and K-m <0.5 mM. The natural function of Pam remains unclear. Chymostatin (K-i<0.3 muM) and Pefabloc SC (K-i not determined) were identified as inhibitors, When the gene was expressed in Escherichia coli on a 12-1 scale, the specific activity in the crude extract was 60 U/mg, compared to 0.24 U/mg in S. maltophilia. In the expression system, Pam made up about 31% of the total soluble cell protein. From 75 g wet cells, 2.1 g of >95% pure enzyme was obtained, which corresponds to a total activity of 416,000 units.