Neuropeptide Y is one of the most abundant neuropeptides in the central and peripheral nervous systems and its sequence is highly conserved among species. A number of key physiological roles for NPY are now emerging, especially in the control of feeding and energy homeostasis. Other physiological actions of NPY are also reviewed. The metabolism of NPY has been examined by employing certain purified ectopeptidases and by using different membrane preparations. These approaches reveal that NPY is processed at its N-terminus by two proline-preferring aminopeptidases: aminopeptidase P and dipeptidyl peptidase IV. The action of the latter enzyme generates NPY (3-36) which has previously been shown to be a selective agonist at the Y2 class of NPY receptor. Thus, post-secretory processing of NPY can modify receptor selectivity. NPY is found to be resistant to the action of two other membrane aminopeptidases (N and W), and to the action of angiotensin converting enzyme. However, it is a substrate for endopeptidase-24.11 (K(m) = 15.4 microM) which can cleave the Tyr20-Tyr21 and Leu30-Ile31 bonds consistent with the known specificity of the enzyme. In striatal synaptic and renal brush border membranes, NEP is shown to be the major NPY hydrolysing activity but plays a lesser role in intestinal brush border membranes. Knowledge of the proteolytic processing of NPY should aid in the design of stable analogues of this neuropeptide.