Angiotensin-(1–7) (Ang-(1–7)) is expressed within the kidney and exhibits renoprotective actions that antagonize the inflammatory, fibrotic and pro-oxidant effects of the Ang II-AT1 receptor axis. We previously identified a peptidase activity from sheep brain, proximal tubules and human HK-2 proximal tubule cells that metabolized Ang-(1–7); thus, the present study isolated and identified the Ang-(1–7) peptidase. Utilizing ion exchange and hydrophobic interaction chromatography, a single 80 kDa protein band on SDS-PAGE was purified from HK-2 cells. The 80 kDa band was excised, the tryptic digest peptides analyzed by LC–MS and a protein was identified as the enzyme dipeptidyl peptidase 3 (DPP 3, EC: 220.127.116.11). A human DPP 3 antibody identified a single 80 kDa band in the purified enzyme preparation identical to recombinant human DPP 3. Both the purified Ang-(1–7) peptidase and DPP 3 exhibited an identical hydrolysis profile of Ang-(1–7) and both activities were abolished by the metallopeptidase inhibitor JMV-390. DPP 3 sequentially hydrolyzed Ang-(1–7) to Ang-(3–7) and rapidly converted Ang-(3–7) to Ang-(5–7). Kinetic analysis revealed that Ang-(3–7) was hydrolyzed at a greater rate than Ang-(1–7) [17.9 vs. 5.5 nmol/min/μg protein], and the Km for Ang-(3–7) was lower than Ang-(1–7) [3 vs. 12 μM]. Finally, chronic treatment of the HK-2 cells with 20 nM JMV-390 reduced intracellular DPP 3 activity and tended to augment the cellular levels of Ang-(1–7). We conclude that DPP 3 may influence the cellular expression of Ang-(1–7) and potentially reflect a therapeutic target to augment the actions of the peptide.