A microbial peptide amidase was found in a limited screening and purified about 500-fold from Stenotrophomonas maltophilia. The native enzyme has a molecular mass of 38 kDa (gel filtration). The sequence of the first 16 amino acids was determined by Edman degradation. The isoelectric point was found to be around 5.8. The peptide amidase exhibited a pH optimum of 6.0 and a temperature optimum of about 39-45 degrees C. The enzyme is stable in 50 mM TRIS/HCl, pH 7.5, at 30 degrees C, and the residual activity was found to be above 90% after 1 week of incubation. The biocatalyst is not inhibited by potential inhibitors like Hg2+, EDTA, D-cycloserine or dithiothreitol and only weakly influenced by inhibitors of serine proteases. The peptide amidase deamidates selectively C-terminal amide groups in peptide amides without hydrolysing internal peptide bonds or amide functions in the side-chain of glutamine or asparagine. Unprotected amino acid amides are not hydrolysed. The enzyme is stereoselective with regard to L-enantiomers in the C-terminal position.