β-Citrylglutamate (BCG), a compound present in adult testis and in the CNS during the pre- and perinatal periods is synthesized by an intracellular enzyme encoded by the RIMKLB gene and hydrolyzed by an as yet unidentified ectoenzyme. To identify β-citrylglutamate hydrolase, this enzyme was partially purified from mouse testis and characterized. Interestingly, in the presence of Ca(2+), the purified enzyme specifically hydrolyzed β-citrylglutamate and did not act on N-acetyl-aspartylglutamate (NAAG). However, both compounds were hydrolyzed in the presence of Mn(2+). This behavior and the fact that the enzyme was glycosylated and membrane-bound suggested that β-citrylglutamate hydrolase belonged to the same family of protein as glutamate carboxypeptidase 2 (GCP2), the enzyme that catalyzes the hydrolysis of N-acetyl-aspartylglutamate. The mouse tissue distribution of β-citrylglutamate hydrolase was strikingly similar to that of the glutamate carboxypeptidase 3 (GCP3) mRNA, but not that of the GCP2 mRNA. Furthermore, similarly to β-citrylglutamate hydrolase purified from testis, recombinant GCP3 specifically hydrolyzed β-citrylglutamate in the presence of Ca(2+), and acted on both N-acetyl-aspartylglutamate and β-citrylglutamate in the presence of Mn(2+), whereas recombinant GCP2 only hydrolyzed N-acetyl-aspartylglutamate and this, in a metal-independent manner. A comparison of the structures of the catalytic sites of GCP2 and GCP3, as well as mutagenesis experiments revealed that a single amino acid substitution (Asn-519 in GCP2, Ser-509 in GCP3) is largely responsible for GCP3 being able to hydrolyze β-citrylglutamate. Based on the crystal structure of GCP3 and kinetic analysis, we propose that GCP3 forms a labile catalytic Zn-Ca cluster that is critical for its β-citrylglutamate hydrolase activity.