A secretory granule associated enzymatic activity from the rat anterior pituitary that can convert the synthetic peptide D-Tyr-Val-Gly into D-Tyr-Val-NH2 is described. Due to the presence of inhibitory activity in the cytosol and rough endoplasmic reticulum/Golgi apparatus fractions, the alpha-amidation activity is barely detectable in crude rat anterior pituitary homogenates. The alpha-amidation activity was primarily soluble, displayed a pH optimum of about 7.0, and showed a requirement for molecular oxygen. The activity was stimulated 7-fold by the addition of optimal concentrations of copper. Of the cofactors tested, only reduced ascorbate produced a severalfold stimulation of activity. Studies with varied D-Tyr-Val-Gly or varied monoiodo-D-Tyr-Val-Gly demonstrate Michaelis Menten kinetics with indistinguishable kinetic constants for both peptides. Upon addition of ascorbate, the apparent Km and Vmax for the synthetic substrate, as estimated from Lineweaver-Burk and Eadie-Hofstee plots, increased by 30- and 60-fold, respectively. Several alpha-melanotropin- and gamma-melanotropin-related peptides with COOH-terminal glycine residues were effective competitive inhibitors of the reaction while the corresponding alpha-amidated peptides were very poor inhibitors. The rat anterior pituitary alpha-amidation activity appears to be very similar to the alpha-amidation activity in rat intermediate and neural pituitary, and mouse anterior pituitary tumor cells.