Dipeptidyl peptidase 4/CD26 (DP4) is a multifunctional serine protease liberating dipeptide from the N-terminus of (oligo)peptides which can modulate the activity of these peptides. The enzyme is involved in physiological processes such as blood glucose homeostasis and immune response. DP4 substrate specificity is characterized in detail using synthetic dipeptide derivatives. The specificity constant k(cat)/K(m) strongly depends on the amino acid in P₁-position for proline, alanine, glycine and serine with 5.0 x 10⁵ M⁻¹ s⁻¹, 1.8 x 10⁴ M⁻¹ s⁻¹, 3.6 x 10² M⁻¹ s⁻¹, 1.1 x 10² M⁻¹ s⁻¹, respectively. By contrast, kinetic investigation of larger peptide substrates yields a different pattern. The specific activity of DP4 for neuropeptide Y (NPY) cleavage comprising a proline in P₁-position is the same range as the k(cat)/K(m) values of NPY derivatives containing alanine or serine in P₁-position with 4 x 10⁵ M⁻¹ s⁻¹, 9.5 x 10⁵ M⁻¹ s⁻¹ and 2.1 x 10⁵ M⁻¹ s⁻¹, respectively. The proposed existence of an additional binding region outside the catalytic center is supported by measurements of peptide substrates with extended chain length. This 'secondary' binding site interaction depends on the amino acid sequence in P₄'-P₈'-position. Interactions with this binding site could be specifically blocked for substrates of the GRF/glucagon peptide family. By contrast, substrates not belonging to this peptide family and dipeptide derivative substrates that only bind to the catalytic center of DP4 were not inhibited. This more selective inhibition approach allows, for the first time, to distinguish between substrate families by substrate-discriminating inhibitors.