gamma-Glutamyl hydrolase (also known as conjugase) is a ubiquitous enzyme that has the capacity to cleave folyl- and antifolylpolyglutamates. This study has revealed that the enzyme is secreted by primary cultures of rat hepatocytes and by H35 hepatoma cells. H35 cells have lower cellular levels of gamma-glutamyl hydrolase than do hepatocytes but secrete a greater proportion of gamma-glutamyl hydrolase. More than 99% of the total enzyme from H35 cells accumulated in the medium after 48 h. The cells were shown to remain intact during the secretion period since lactate dehydrogenase, dihydrofolate reductase, and lysosomal hydrolases other than gamma-glutamyl hydrolase were retained within the cell. Using the substrate 4-amino-10-methyl-pteroyldiglutamate (4-NH2-10-CH3-Pte-Glu2), the intracellular and secreted enzyme form(s) from H35 cells were found to have the following properties (a) Km values of 24.3 +/- 3.7 microM and 34.8 +/- 8.6 microM, respectively, and (b) maximal activity at pH 5 to 7 and apparent molecular weights of 120,000 by gel filtration. Both the cellular and secreted enzymes convert 4-NH2-10-CH3-PteGlu4 and pteroylpentaglutamate acid, to the corresponding monoglutamates with little or no appearance of intermediate chain length polyglutamates. This suggests that both act primarily as endopeptidases. Thus far, the cellular and secreted enzymes cannot be differentiated although the current studies do not establish this point unequivocally. Alterations in the cellular and secreted H35 cell gamma-glutamyl hydrolase levels in response to changes in culture conditions revealed that glutamine enhances activity while insulin diminishes it. Other transformed cells found to secrete this protein are Hep-G2 human hepatoma, JAR human choriocarcinoma, HeLa, and rat glioma. gamma-Glutamyl hydrolase could not be detected in medium conditioned by human MCF-7 breast cancer cells, and relatively low activities were found in the medium from CCRF-CEM or K562 leukemia cells. These studies directly establish for the first time the secretion of gamma-glutamyl hydrolase in vitro.