A stable-isotope dimethyl labeling strategy was previously shown to be a useful tool for quantitative proteomics. More recently, N-terminal dimethyl labeling was also reported for peptide sequencing in combination with database searching. Here, we extend these previous studies by incorporating N-terminal isotopic dimethylation for de novo sequencing of neuropeptides directly from tissue extract without any genomic information. We demonstrated several new sequencing applications of this method in addition to the identification of the N-terminal residue using the enhanced a(1) ion. The isotopic labeling also provides easier and more confident de novo sequencing of peptides by comparing similar MS/MS fragmentation patterns of the isotopically labeled peptide pairs. The current study on neuropeptides shows several distinct fragmentation patterns after N-terminal dimethylation which have not been reported previously. The y((n-1)) ion is enhanced in multiply charged peptides and is weak or missing in singly charged peptides. The MS/MS spectra of singly charged peptides are simplified due to the enhanced N-terminal fragments and suppressed internal fragments. The neutral loss of dimethylamine is also observed. The mechanisms for the above fragmentations are proposed. Finally, the structures of the immonium ion and related ions of N(alpha), N(epsilon)-tetramethylated lysine and N(epsilon)-dimethylated lysine are explored.