In enterobacteria, the ampD gene encodes a cytosolic protein which acts as a negative regulator of β-lactamase expression. It is shown here that the AmpD protein is a novel N-acetylmuramyl-L-alanine amidase (E.C. participating in the intracellular recycling of peptido-glycan fragments. Surprisingly, AmpD exhibits an exclusive specificity for substrates containing anhydro muramic acid. This anhydro bond is mainly found in the peptidoglycan degradation products formed by the periplasmic lytic transglycosylases and thus might behave as a‘recycling tag’allowing the enzyme to distinguish these fragments from the newly synthesized peptidoglycan precursors. The AmpD substrate (or substrates) which accumulates in the absence of the corresponding enzymatic activity acts as an intracellular positive effector for β-lactamase expression and might represent an element of a communication network between the chromosome and the cell wall peptidoglycan.