Microvillus membranes from rat kidney, jejunum, and epididymis have been purified by the Ca precipitation method. The membranes exhibit enrichment in specific activities of gamma-glutamyl transpeptidase, aminopeptidase M, and a dipeptidase. The latter has been characterized and shown to be the principal activity responsible for the hydrolysis of S derivatives of Cys-Gly (including cystinyl-bis-glycine (Cys-bis-Gly) and 5-hydroxy-6-S-cysteinylglycyl-1-7,9-trans-11,14-cis-eicosatetraenoic acid (leukotriene D4)). A method is described for the simultaneous purification of papain-solubilized forms of the three enzymes from renal microvilli. Dipeptidase (Mr = 105,000) appears to be a zinc metalloprotein composed of two Mr = 50,000 subunits. The enzyme is severalfold more effective in the hydrolysis of dipeptides than aminopeptidase M. Dipeptidase, in contrast to aminopeptidase M, is inhibited by thiol compounds; Cys-Gly, in particular, is a potent inhibitor (Ki = 20 microM). The inhibition of dipeptidase by thiols has been employed to probe the relative significance of dipeptidase and aminopeptidase M in the metabolism of glutathione and its derivatives at the membrane surface.