The imaginal discs of Drosophila melanogaster give rise to the adult epidermis during metamorphosis. During this developmental period several peptidase genes are expressed in disc cells, but there is a paucity of biochemical information regarding substrate specificity. We have used peptides and peptidyl 7-amino-4-methylcoumarin (AMC) substrates to detect several peptidases either positioned on the surface of wing discs or secreted by the imaginal cells. Using [Leu(5)]enkephalin as a substrate, a captopril sensitive dipeptidyl carboxypeptidase (angiotensin I-converting enzyme) and an amastatin-sensitive aminopeptidase were detected as prominent activities associated with intact discs. The formation of [Leu(5)]enkephalin-derived Phe was attributed to the concerted action of the D. melanogaster angiotensin I-converting enzyme (Ance) and a dipeptidase. The disc Ance also showed endopeptidic activity towards locust tachykinin-1 (LomTK-I) by cleaving the Gly-Val peptide bond, but this enzyme was not the sole endopeptidase activity associated with discs. Complete inhibition of the endopeptidic hydrolysis of the LomTK-1 by a disc homogenate required a combination of captopril and the neprilysin inhibitor, phosphoramidon, providing biochemical evidence for a neprilysin-like peptidase, in addition to Ance, in imaginal discs of D. melanogaster. Peptidyl AMC substrates for furin, prohormone convertase and tryptase provided evidence for trypsin-like serine endopeptidases in addition to the metalloendopeptidases. We conclude that imaginal discs are endowed with a variety of peptidases from different families that together are capable of hydrolyzing a broad range of peptides and proteins. Some of these peptidases might be responsible for the metabolic activation/inactivation of signaling peptides, as well as being involved in the production of dipeptides and free amino acids required for protein synthesis and osmotic balance during adult morphogenesis.