In vitro studies of brush-border intestinal transport of dipeptides and cytoplasmic hydrolysis in fish suggest that these processes could be key mechanisms in the absorption and utilization of nutrients for growth. However, in vivo experimentation to study the nutritional importance of these processes was needed. We compared three dietary formulations based on free, peptide and protein sources of amino acids. Our results were the first to show that a synthetic dipeptide (PP)-based diet could support growth in the early stages of ontogenesis of a teleost fish, rainbow trout (Oncorhynchus mykiss), whereas a free amino acid (FAA)-based diet failed. We found that fish fed an FAA-based diet had an increased rate of ammonia excretion [1.78 +/- 0.19 mmol NH(3)-N/(kg body wt.h)], compared with fish fed a PP-based diet [1.25 +/- 0.07 mmol NH(3)-N/(kg body wt.h)], suggesting that deamination is involved in the metabolism of dietary FAA. Teleost fish are known to obtain a high proportion of total energy from protein, compared with higher vertebrates. However, we found that feeding trout alevins a PP-based diet increased postprandial oxygen consumption for 2 to 24 h, whereas other treatments decreased 24-h postprandial metabolism. This may indicate that peptide metabolism is less efficient than protein metabolism. Juvenile rainbow trout differed from alevins in their response to FAA- and PP-based diets. These observations strongly suggest that intestinal dietary peptide transport and hydrolysis could support protein synthesis and growth in vertebrates that respond poorly to FAA-based diets. We conclude that nutrient administration may be improved by manipulating dietary peptide composition and peptide/protein ratios, leading to better utilization of synthetic peptides, with nutritional and therapeutic implications for all vertebrates.