An aminopeptidase that has peptide bond formation activity was identified in the cell-free extract of carpophore of Pleurotus eryngii. The enzyme, redesignated as eryngase, was purified for homogeneity and characterized. Eryngase had a molecular mass of approximately 79 kDa. It showed somewhat high stability with respect to temperature and pH; it was inhibited by iodoacetate. Among hydrolytic activities toward aminoacyl-p-nitroanilides (aminoacyl-pNAs), eryngase mainly hydrolyzed hydrophobic l-aminoacyl-pNAs and exhibited little activity toward d-Ala-pNA and d-Leu-pNA. In terms of peptide bond formation activity, eryngase used various aminoacyl derivatives as acyl donors and acceptors. The products were all dipeptidyl derivatives. Investigation of time dependence on peptide synthesis revealed that some peptides that are not recognized as substrates for hydrolytic activity of eryngase could become good targets for synthesis. Furthermore, eryngase has produced opioid dipeptides--l-kyotorphin (l-Tyr-l-Arg) and d-kyotorphin (l-Tyr-d-Arg)--using l-Tyr-NH2 and d- and l-Arg-methyl ester respectively as an acyl donor and acceptor. Yield evaluation of kyotorphin synthesis indicated that the conversion ratio of substrate to kyotorphin was moderate: the value was estimated as greater than 20%.