Purified peptidyl dipeptidase (angiotensin I converting enzyme or kininase II) from human lung or hog kidney is inhibited by commercially prepared plasma protein preparations, by human serum albumin and by the additive albumin stabilizer, acetyltryptophan. After the initial steps of purification, albumin was detected by immunodiffusion as a component in human lung peptidyl dipeptidase preparation. Fragment C of albumin (sequence 124-298) is a more potent inhibitor than the parent molecule (Ki = 1.7 X 10(-5)M). Reduction and carboxymethylation of five of the six S-S bridges in Fragment C yield the most potent noncompetitive inhibitor (Ki = 3 X 10(-6)M). Reduction of the sixth bridge raises the K1. This indicates that maintenance of the tertiary structure in Fragment C is of importance for the inhibition. Neither albumin nor Fragment C are substrates of the enzyme. Fragment C and its derivative also inhibit the inactivation of bradykinin by the purified human enzyme and by the peptidyl dipeptidase on the surface of intact cultured human endothelial cells.