Proteinaceous and peptidic nitrogen is a potential direct nutrient source for both plants and microbes in the soil, without prior degradation to amino acids and mineralization. We used a series of five sites along an elevation gradient from 15 m a.s.l. to 710 m a.s.l. along which primary productivity decreases to investigate peptide utilization rates by soil microbes. Using 14C-labeled L-alanine, L-dialanine, and L-trialanine in a series of incubation experiments, we show that peptides are directly and rapidly assimilated by soil microbes, and that they are utilized for both biomass production and respiration. Alanine, dialanine, and trialanine were mineralized rapidly by soil microbes from the five sites along the gradient. Across all five sites, dialanine and trialanine were mineralized faster than alanine. In competition experiments, a 100-fold excess of alanine had no effect on the rate of trialanine mineralization in four of the five sites, and the same excess of trialanine had no effect on alanine mineralization. This is indicative of uptake of the intact peptide by the soil microbial community. Our findings have implications for understanding terrestrial nitrogen cycling because they point to a short-circuit whereby large peptides and proteins need only be extracellularly cleaved to short chain length peptides before direct assimilation by microbes.