This study was undertaken to explore in synaptosomal preparations the disposition of N-acetyl-aspartyl-glutamate (NAAG), an endogenous acidic dipeptide neurotransmitter candidate. Radiolabel from N-acetyl-aspartyl(/sup 3/H)glutamate was taken up rapidly into an osmotically sensitive compartment by rat brain synaptosomal preparations in a sodium-, temperature-, and time-dependent manner. HPLC analysis of the accumulated radiolabel indicated that the bulk of the tritium cochromatographed with glutamic acid and not with NAAG. In contrast, (/sup 14/C)NAAG, labeled on the N-terminal acetate, was not taken up by the synaptosomal preparation. All effective inhibitors of synaptosomal, Na+-dependent (/sup 3/H)glutamate uptake were found to exhibit similar potency in inhibiting uptake of tritium derived from (/sup 3/H)NAAG. However, certain alpha-linked acidic dipeptides, structurally similar to NAAG, as well as the potent convulsant quisqualic acid inhibited synaptosomal transport of (/sup 3/H)NAAG but were ineffective as inhibitors of (/sup 3/H)glutamate transport. Together with a demonstration of disparities between the regional accumulation of radiolabel from (/sup 3/H)NAAG and high-affinity (/sup 3/H)glutamate uptake, these data suggest the presence in brain of a specific peptidase targeting carboxy-terminal glutamate-containing dipeptides that may be coupled to the Na+-dependent glutamate transporter. These findings provide a possible mechanism for NAAG inactivation subsequent to its release from nerve endings.