beta-Aminopeptidases exhibit both hydrolytic and aminolytic (peptide bond formation) activities and have only been reported in bacteria. We identified a gene encoding the beta-aminopeptidase homolog from a genome database of the filamentous fungus Aspergillus oryzae. The gene was overexpressed in A. oryzae, and the resulting recombinant enzyme was purified. Apart from bacterial homologs [beta-Ala-para-nitroanilide (pNA)], the enzyme preferred d-Leu-pNA and d-Phe-pNA as substrates. Therefore, we designated this gene as D-stereoselective aminopeptidase A (damA). The purified recombinant DamA was estimated to be a hexamer and was composed of two subunits with molecular masses of 29.5 and 11.5 kDa, respectively. Optimal hydrolytic activity of DamA toward d-Leu-pNA was observed at 50 A degrees C and pH 8.0. The enzyme was stable up to 60 A degrees C and from pH 4.0-11.0. DamA also exhibited aminolytic activity, producing d-Leu-d-Leu-NH2 from d-Leu-NH2 as a substrate. In the presence of 3.0 M NaCl, the amount of pNA liberated from d-Leu-pNA by DamA was 3.1-fold higher than that in the absence of NaCl. Thus, DamA is a halophilic enzyme. The enzyme was utilized to synthesize several hetero-dipeptides containing a d-amino acid at the N-terminus as well as physiologically active peptides.