A new thermostable dipeptidase gene was cloned from the thermophile Brevibacillus borstelensis BCS-1 by genetic complementation of the D-Glu auxotroph Escherichia coli WM335 on a plate containing D-Ala-D-Glu. Nucleotide sequence analysis revealed that the gene included an open reading frame coding for a 307-amino-acid sequence with an M(r) of 35,000. The deduced amino acid sequence of the dipeptidase exhibited 52% similarity with the dipeptidase from Listeria monocytogenes. The enzyme was purified to homogeneity from recombinant E. coli WM335 harboring the dipeptidase gene from B. borstelensis BCS-1. Investigation of the enantioselectivity (E) to the P(1) and P(1)' site of Ala-Ala revealed that the ratio of the specificity constant (k(cat)/K(m)) for L-enantioselectivity to the P(1) site of Ala-Ala was 23.4 +/- 2.2 [E = (k(cat)/K(m))(L,D)/(k(cat)/K(m))(D,D)], while the D-enantioselectivity to the P(1)' site of Ala-Ala was 16.4 +/- 0.5 [E = (k(cat)/K(m))(L,D)/(k(cat)/K(m))(L,L)] at 55 degrees C. The enzyme was stable up to 55 degrees C, and the optimal pH and temperature were 8.5 and 65 degrees C, respectively. The enzyme was able to hydrolyze L-Asp-D-Ala, L-Asp-D-AlaOMe, Z-D-Ala-D-AlaOBzl, and Z-L-Asp-D-AlaOBzl, yet it could not hydrolyze D-Ala-L-Asp, D-Ala-L-Ala, D-AlaNH(2), and L-AlaNH(2.) The enzyme also exhibited beta-lactamase activity similar to that of a human renal dipeptidase. The dipeptidase successfully synthesized the precursor of the dipeptide sweetener Z-L-Asp-D-AlaOBzl.