The pgdS gene product of Bacillus subtilis, PgdS, cleaves poly-gamma-glutamate (PGA) in an endopeptidase-like fashion. However, its catalytic property remains obscure. In this study, a simple assay for the PgdS enzyme using 1-fluoro-2,4-dinitrobenzene was developed, and some characteristics of PgdS, such as optimal pH, were examined. The enzyme was strongly inhibited by a thiol-modifying reagent, suggesting that it possesses essential cysteine residue(s) in catalysis. PgdS exhibited a high affinity to PGA that consisted mainly of D-glutamate residues, but no affinity to PGA composed only of L-glutamate residues (L-PGA). The enzyme processed DL-copolymer-type PGA (DL-PGA) with an average molecular mass of 1000 kDa to a high-molecular-mass L-glutamate-rich fragment (average 200 kDa), the L-rich PGA fragment, and low-molecular-mass fragment composed mostly of D-glutamate residues (average 5 kDa), D-fragment. To deepen our understanding of the catalytic property of the PgdS enzyme, we analyzed the structures of the N- and C-terminal regions and found that D-glutamyl residues successively lie even at both ends of the L-rich PGA fragment. Our observations indicate that PgdS is a novel endo-peptidase that specifically cleaves the gamma-amide linkage between two D-glutamate residues in PGA, i.e., gamma-glutamyl DD-amidohydrolase. The enzyme is possibly useful in the biochemical processing of B. subtilis DL-PGA.