A novel enzyme that catalyzes efficient hydrolysis of capsaicin (8-methyl-N-vanillyl-6-nonenamide) was isolated from the culture broth of Streptomyces mobaraensis. The enzyme consisted of two dissimilar subunits with molecular masses of 61 and 19 kDa. The enzyme was activated and stabilized in the presence of Co2+. It showed a pH optimum of about 8 and was stable at temperatures of up to 55 degrees C for 1 h at pH 7.8. The specific activity of the enzyme for the hydrolysis of capsaicin was 10(2)-10(4) times higher than those for the enzymes reported to date. In an aqueous/n-hexane biphasic system, capsaicin analogues such as octanoyl, decanoyl, and lauroyl vanillylamides were synthesized from the corresponding fatty acids and vanillylamine at yields of 50% or greater. In addition, the enzyme catalyzed the deacylation of N-lauroyl-L-amino acids and N-lauroyl-L-dipeptides and the efficient synthesis of Nalpha-lauroyl-L-lysine, Nepsilon-lauroyl-L-lysine, and various N-lauroyl-peptides in aqueous solution in both the absence and the presence of glycerol.