From a Xenopus laevis skin library a cDNA coding for dipeptidyl aminopeptidase IV (DPP IV) was isolated. The ORF codes for a protein with sequence similarity to DPP-IV-like proteins, including mammalian DPP IV and X. laevis fibroblast activation factor. In contrast to the membrane-bound mammalian enzymes, mature X. laevis DPP IV is a soluble secreted polypeptide. The frog enzyme possesses a cleavable signal sequence; the mature protein starts at Thr30 of the polypeptide predicted from the cDNA sequence. Expression of the cloned cDNA by recombinant vaccinia virus resulted in the formation of a protein with the expected molecular mass and substrate specificity. Recombinant DPP IV was present in high concentration in the supernatant of infected cells and exhibited enzymatic activity towards the synthetic substrate alanyl-prolyl-p-nitroanilide.