Dipeptidyl peptidase IV (DPP-IV; CD26) (EC 3.4.14.5) is a membrane-anchored ectoenzyme with N-terminal exopeptidase activity that preferentially cleaves X-Pro-dipeptides. It can also be spontaneously released to act in the extracellular environment or associated with the extracellular matrix. Many hematopoietic cytokines and chemokines contain DPP-IV-susceptible N-terminal sequences. We monitored DPP-IV expression and activity in murine bone marrow and liver stroma cells which sustain hematopoiesis, myeloid precursors, skin fibroblasts, and myoblasts. RT-PCR analysis showed that all these cells produced mRNA for DPP-IV. Partially purified protein reacted with a commercial antibody to CD26. The K M values for Gly-Pro-p-nitroanilide ranged from 0.43 to 0.98 mM for the membrane-associated enzyme of connective tissue stromas, and from 6.76 to 8.86 mM for the enzyme released from the membrane, corresponding to a ten-fold difference, but only a two-fold difference in K M was found in myoblasts. K M of the released soluble enzyme decreased in the presence of glycosaminoglycans, nonsulfated polysaccharide polymers (0.8-10 µg/ml) or simple sugars (320-350 µg/ml). Purified membrane lipid rafts contained nearly 3/4 of the total cell enzyme activity, whose K M was three-fold decreased as compared to the total cell membrane pool, indicating that, in the hematopoietic environment, DPP-IV activity is essentially located in the lipid rafts. This is compatible with membrane-associated events and direct cell-cell interactions, whilst the long-range activity depending upon soluble enzyme is less probable in view of the low affinity of this form.