Many xenobiotics are detoxified through the mercapturate metabolic pathway. The final product of the pathway, mercapturic acids (N-acetyl cysteine S-conjugates), are secreted predominantly by the renal proximal tubule. Mercapturic acids may undergo a transformation mediated by aminoacylases and cysteine S-conjugate Many xenobiotics are detoxified through the mercapturate metabolic pathway. The final product of the pathway, mercapturic acids (N-acetyl cysteine S-conjugates), are secreted predominantly by the renal proximal tubule. Mercapturic acids may undergo a transformation mediated by aminoacylases and cysteine S-conjugate -lyases leading to nephrotoxic reactive thiol formation. The deacetylation of cysteine S-conjugates of N-acyl aromatic amino acids is thought to be mediated by an aminoacylase, whose molecular identity has not been determined. In the present study we have cloned an aminoacylase, aminoacylase III, that likely mediates this process in vivo, and characterized its function and structure. The enzyme consists of 318 amino acids and has a molecular mass on SDS-PAGE of ~35 kDa. In non-denaturing conditions, the molecular mass of the enzyme is ~140 kDa as determined by size-exclusion chromatography, suggesting that it is a tetramer. In agreement with this hypothesis, transmission electron microscopy and image analysis of aminoacylase III showed that the monomers of the enzyme are arranged with a 4-fold rotational symmetry. Northern analysis demonstrated a ~1.4 kb transcript expressed predominantly in kidney, with less expression in liver, heart, small intestine, brain, lung, testis, and stomach. In kidney, aminoacylase III was immunolocalized predominantly to the apical domain of S1 proximal tubules, and in the cytoplasm of S2 and S3 proximal tubules. The data suggest that in the kidney proximal tubule, aminoacylase III plays an important role in deacetylating mercapturic acids. The predominant cytoplasmic localization of aminoacylase III may explain the greater sensitivity of the proximal straight tubule to the nephrotoxicity of mercapturic acids.