Catalyzes the peptide bond hydrolysis in dipeptides, displaying a non-redundant activity toward threonyl dipeptides (By similarity). Mediates threonyl dipeptide catabolism in a tissue-specific way (By similarity). Has high dipeptidase activity toward cysteinylglycine, an intermediate metabolite in glutathione metabolism (PubMed:19346245, PubMed:12473676). Metabolizes N-lactoyl-amino acids, both through hydrolysis to form lactic acid and amino acids, as well as through their formation by reverse proteolysis (PubMed:25964343). Plays a role in the regulation of cell cycle arrest and apoptosis (PubMed:17121880, PubMed:24395568). 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 H2O + L-alanyl-L-cysteine = L-alanine + L-cysteine (S)-lactate + L-phenylalanine = H2O + N-[(S)-lactoyl]-L-phenylalanine Binds 2 manganese ions per subunit. Inhibited by p-hydroxymercurybenzoate. The inhibitory concentration 50% (IC(50)) is 13 uM. Inhibited by bestatin. The inhibitory concentration 50% (IC(50)) is 7 nM at pH 9.5. Homodimer. Ubiquitously expressed with higher levels in kidney and liver (at protein level). Expressed in peripheral blood leukocytes (PubMed:12473676). Expressed in gastric mucosa and down-regulated in gastric cancer mucosal tissues (at protein level) (PubMed:24395568). Broadly expressed in fetal tissues. Expressed in adult liver and placenta. The reverse proteolysis is not negligible in vivo as long as the substrates are present in considerable concentrations, such as upon physical exercice. N-lac-Phe plasma levels are increased in patients with PKU with increased plasma Phe levels. N-lactoyl-amino acids are present in many tissues. Lacks a part of the catalytic domain. Belongs to the peptidase M20A family.