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Penicillin-binding protein 7 (PBP7) and its proteolytic degradation product PBP8 are shown to be soluble proteins, which can be set free from whole cells of Escherichia coli by an osmotic shock. The proteins are loosely associated with the membranes and are totally released into the supernatant in the presence of 1 M NaCl. Partial purification of PBP8 was accomplished by hydroxyapatite, heparin-Sepharose and Monos chromatography. Murein meso-diaminopimelate-d-alanine dd-endopeptidase activity was demonstrated for both PBP7 and PBP8, which specifically hydrolyse the dd-diaminopimelatealanine bonds in high-molecular-mass murein sacculi but fail to cleave these bonds in isolated dimeric muropeptides. The enzyme is inhibited by the ‘penem’β-lactam antibiotic CGP31608 at a concentration of 0.25 μg/ml by 50%. Thus besides PBP4 and the mepA gene product, a third endopeptidase exists in E. coli.