Abstract: 1. Intact cells of Saccharomyces cerevisiae catalyze the hydrolysis of various aminopeptidase substrates. This activity is not due to permeation of substrates and products but exerted by an external enzyme. 2. From its substrate specificity and the effects of pH and inhibitors the enzyme was identified as aminopeptidase II. 3. About 40% of total aminopeptidase II activity is detectable with untreated exponentially growing cells. Up to two thirds of the external enzyme is released into the medium during enzymic digestion of the cell wall, while little enzyme is liberated by osmotic shock. Membrane preparations contained only small amounts of aminopeptidase II; thus, the localization of the external enzyme appears to be similar to that of the so-called 'periplasmic' yeast hydrolases. 4. By cytochemical methods the presence of aminopeptidase II in the cell envelope was visualized. 5. In contrast to aminopeptidase II, yeast dipeptidase is an entirely intracellular enzyme.