In previous studies we have demonstrated a secretory granule-associated peptide alpha-amidation activity in rat anterior, intermediate, and posterior pituitary. This activity is capable of converting 125I-labeled synthetic D-Tyr-Val-Gly to labeled D-Tyr-Val-NH2, and requires ascorbic acid, CuSO4, and molecular oxygen for optimal activity. Because of the requirement for peptides with COOH-terminal glycine residues, and cofactor requirements similar to monooxygenases such as dopamine beta-monooxygenase, we have proposed that the alpha-amidating enzyme be named peptidylglycine alpha-amidating monooxygenase, or PAM. The present study focused on (i) verifying that PAM could utilize a physiologically relevant peptide substrate, and (ii) demonstrating the retention of the cofactor requirements with purification of PAM. PAM (Mr = 50,000) was partially purified from rat anterior pituitary secretory granules and was shown to be capable of converting alpha-N-acetyl-ACTH(1-14) to alpha-N-acetyl-ACTH(1-13)NH2 (alpha-melanocyte stimulating hormone) and ACTH(9-14) to ACTH(9-13)NH2. The optimal rates for these conversions were dependent on ascorbic acid and CuSO4. Kinetic analyses, using the model compound D-Tyr-Val-Gly as the peptide substrate, demonstrated that, compared to the crude granule extract, the partially purified enzyme displayed increased apparent affinities for both the peptide substrate and ascorbate. These analyses also showed that the Km for D-Tyr-Val-Gly was dependent on the concentration of ascorbate, while the Km for ascorbate was constant over a wide range of D-Tyr-Val-Gly concentrations. The results presented here indicate that PAM can alpha-amidate physiologically relevant peptides related to alpha MSH, and performs the reaction in an ascorbate-dependent fashion. Retention of the ascorbate and copper requirements with purification further support the hypothesis that these cofactors are important requirements for the COOH-terminal alpha-amidation of neuro and endocrine peptides.