Catalyzes the peptide bond hydrolysis in dipeptides, displaying a non-redundant activity toward threonyl dipeptides. Mediates threonyl dipeptide catabolism in a tissue-specific way (By similarity). Has high dipeptidase activity toward cysteinylglycine, an intermediate metabolite in glutathione metabolism. Metabolizes N-lactoyl-amino acids, both through hydrolysis to form lactic acid and amino acids, as well as through their formation by reverse proteolysis. Plays a role in the regulation of cell cycle arrest and apoptosis (By similarity). Hydrolysis of dipeptides, preferentially hydrophobic dipeptides including prolyl amino acids. H2O + L-threonyl-L-threonine = 2 L-threonine H2O + L-threonyl-L-serine = L-serine + L-threonine H2O + L-seryl-L-threonine = L-serine + L-threonine H2O + L-cysteinylglycine = glycine + L-cysteine (S)-lactate + L-phenylalanine = H2O + N-[(S)-lactoyl]-L-phenylalanine Binds 2 manganese ions per subunit. Homodimer. Belongs to the peptidase M20A family.