gamma-Glutamyl hydrolase has been partially purified and characterized from conditioned culture medium of H35 hepatoma cells. Evidence for heterogeneity of the enzyme is derived from its elution as three distinct peaks of enzymatic activity when the enzyme is purified by TSK-butyl-Sepharose column chromatography. These three enzyme fractions appear to have identical catalytic properties but, as yet, the basis for their resolution is not understood. A rapid, sensitive and simple assay based on reverse-phase HPLC fluorescent detection with pre-column derivatization using o-phthalaldehyde (OPA) was developed to separate OPA-derivatives of poly-gamma-glutamates and glutamic acid. Using this assay and the standard HPLC assay for pteroylpolyglutamates, the enzyme appears to be an endopeptidase with respect to pteroylpenta-gamma-glutamate (PteGlu5), methotrexate penta-gamma-glutamate (4-NH2-10-CH3PteGlu5) and p-aminobenzoyl-penta-gamma-glutamate (pABAGlu5). The initial products are PteGlu1 (or 4-NH2-10-CH3PteGlu1 or pABAGlu1) and intact tetra-gamma-glutamate, which is subsequently degraded to glutamic acid. When penta-gamma-glutamate is the substrate, the cleavage of the gamma-bonds by the enzyme is less ordered, with the early appearance of mono-, di-, tri- and tetraglutamate. Poly-alpha-glutamate is not a substrate nor are pABA-gamma-Glu5 or penta-gamma-glutamate covalently linked to albumin. 4-NH2-10-CH3PteGlu2 or Glu5 bound to dihydrofolate reductase is not a substrate for the enzyme, offering further evidence that protein-associated poly-gamma-glutamates are poor substrates for gamma-glutamyl hydrolase from H35 hepatoma cells.