VanXY(C), a bifunctional enzyme from VanC-phenotype Enterococcus gallinarum BM4174 that catalyses D,D-peptidase and D,D-carboxypeptidase activities, was purified as the native protein, as a maltose-binding protein fusion and with an N-terminal tag containing six histidine residues. The kinetic parameters of His(6)-VanXY(C) were measured for a variety of precursors of peptidoglycan synthesis involved in resistance: for D-Ala-D-Ala, the K(m) was 3.6 mm and k(cat), 2.5 s(-1); for UDP-MurNAc-L-Ala-D-Glu-L-Lys-DAla-D-Ala (UDP-MurNAc-pentapeptide[Ala]), K(m) was 18.8 mm and k(cat) 6.2 s(-1); for D-Ala-D-Ser, K(m) was 15.5 mm and k(cat) 0.35 s(-1). His(6)-VanXYC was inactive against the peptidoglycan precursor UDP-MurNAc-L-Ala-D-Glu-L-Lys-D-Ala-D-Ser (UDP-MurNAc-pentapeptide[Ser]). The rate of hydrolysis of the terminal D-Ala of UDP-MurNAc-pentapeptide[Ala] was inhibited 30% by 2 mm D-Ala-D-Ser or UDP-MurNAc-pentapeptide[Ser]. Therefore preferential hydrolysis of substrates terminating in D-Ala would occur during peptidoglycan synthesis in E. gallinarum BM4174, leaving precursors ending in D-Ser with a lower affinity for glycopeptides to be incorporated into peptidoglycan. Mutation of an aspartate residue (Asp59) of His-tagged VanXY(C) corresponding to Asp68 in VanX to Ser or Ala, resulted in a 50% increase and 73% decrease, respectively, of the specificity constant (k(cat)/K(m)) for D-Ala-D-Ala. This situation is in contrast to VanX in which mutation of Asp68-->Ala produced a greater than 200,000-fold decrease in the substrate specificity constant. This suggests that Asp59, unlike Asp68 in VanX, does not have a pivotal role in catalysis.