Xaa-Pro dipeptidase is a cytosolic dipeptidase that hydrolyzes dipeptides with proline or hydroxyproline at the carboxy terminus (but not Pro-Pro). It is important in collagen metabolism because of the high levels of aminoacids.

PEPD encodes a member of the peptidase family. The protein forms a homodimer that hydrolyzes dipeptides or tripeptides with C-terminal proline or hydroxyproline residues. The enzyme serves an important role in the recycling of proline, and may be rate limiting for the production of collagen. Mutations in this gene result in prolidase deficiency, which is characterized by the excretion of large amount of di- and tri-peptides containing proline. Multiple transcript variants encoding different isoforms have been found for this gene.