Bifunctional peptidylglycine alpha-amidating enzyme (alpha-AE) catalyzes the O2-dependent conversion of C-terminal glycine-extended prohormones to the active, C-terminal alpha-amidated peptide and glyoxylate. We show that alpha-AE will also catalyze the oxidative cleavage of N-acylglycines, from N-formylglycine to N-arachidonoylglycine. N-Formylglycine is the smallest amide substrate yet reported for alpha-AE. The (V/K)app for N-acylglycine amidation varies approximately 1000-fold, with the (V/K)app increasing as the acyl chain length increases. This effect is largely an effect on the KM,app; the KM,app for N-formylglycine is 23 +/- 0.88 mM, while the KM,app for N-lauroylglycine and longer chain N-acylglycines is in the range of 60-90 microM. For the amidation of N-acetylglycine, N-(tert-butoxycarbonyl)glycine, N-hexanoylglycine, and N-oleoylglycine, the rate of O2 consumption is faster than the rate of glyoxylate production. These results indicate that there must be the initial formation of an oxidized intermediate from the N-acylglycine before glyoxylate is produced. The intermediate is shown to be N-acyl-alpha-hydroxyglycine by two-dimensional 1H-13C heteronuclear multiple quantum coherence (HMQC) NMR.